LIBRARY OF CONGRESS. 

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UNITED STATES OF AMERICA. 



TAXATION AND WORK 

A SERIES OF TREATISES 
ON 

THE TARIFF AND THE CURRENCY 



BY 



/ 



EDWARD ATKINSON, LL.D., Ph.D. 



" To lay with one hand the power of the government on the property of the 
citizen, and with the other to bestow it upon favored individuals to aid private 
enterprises and build up private fortunes, is none the less a robbery because it is 
done under the forms of law and is called taxation." 

Justice Miller, in Loan Association vs. Topeka (20th Wallace, 655). 



( 



.^' ^ 



G. P. PUTNAM'S SONS 

NEW YORK LONDON 

27 WEST TWENTY-THIRD STREET 24 BEDFORD STREET, STRAND 

®^c limckcrbockcr ^wss 
1892 






""•"y gr---^-'-*^. 



Hrn55 



Copyright, 1892 

BY 

EDWARD ATKINSON 

Entered at Stationer^ Hall, London 
By Edward Atkinson 



Elcctrotypcd, Printed, and Bound by 

Ubc "RnichcrbocFjcr press, •ftew l!?orft 

G. P. Putnam's Sons 



CONTENTS. 



CHAPTER PAGB 

Introduction v 



I. Occupations. Distribution of Products 
II. Taxation Measured by Work 

III. Taxation Measured in Money 

IV. Principal Sources of Revenue 
V. How THE Tariff should be Reformed . 

VI. Taxation which the Government does not 

Receive .... 
VII. British Tariff Reform . 
VIII. Beggarly Compensation of United States 
Officials 
IX. What Is Protection ? 
X. Occupations that cannot be 

Duties on Imports 
XI. Method of Tariff Reform 
XII. Protection by Exemption from Taxation 

XIII. Free Trade the Objective Point . 

XIV. Attempted Definition of the Principle of 

Protection by Senators Sherman, Hoar, 

AND Aldrich 76 

XV. Hamilton's Policy 85 

XVI. Tariff Protection does not Raise Wages . 93 
XVII. Protection Promotes War ; Free Trade 

Promotes Peace . . . , • .104 
iii 



Protected by 



I 

6 

10 

17 

22 

26 
32 

39 

45 

53 
57 
61 



IV 



CONTENTS, 



CHAPTER 

XVIII. 

XIX. 

XX. 

XXI. 

XXII. 

XXIII. 

XXIV. 

XXV. 

XXVI. 

XXVII. 

XXVIII. 

XXIX. 

XXX. 

XXXI. 

Index 



Does Tariff Protection Promote Liberty ? i 13 

Progressive Reduction of Duties 

Cost of a High Tariff . . 

Development by Free Commerce . 

High Wages and Low Cost . 

The Use of Machinery by Nations 

The Waste of Armies .... 

Senator Morrill's Report on Canada 

Received. Food and Wages . 
Silver, Bi-Metallism and Free Coinage 

Volume of Trade 

Taxation By Bad Money 

How TO Maintain Silver Equal to Gold 

The Issue Joined 

Personal Observations — Conclusion 



123 
131 
145 
159 

170 
180 

193 

205 
220 

233 
242 
250 
261 
277 



INTRODUCTION. 



The principal difficulty in dealing with the tariff ques- 
tion in recent years has been due to the fact that the 
evils of a bad system of collecting our national revenues 
are concealed. That is the fault of almost every system 
of indirect taxation. Those who suffer the most do not 
know what hurts them. There are also great numbers of 
people upon whom the burden falls but lightly who would 
even prefer to pay a larger sum by indirect taxation " un- 
beknownst-like," than to be obliged to submit to a direct 
assessment like that by which our State and municipal 
taxes are collected. 

The total amount of direct taxes for the support of 
State, county, city, and town governments is less than 
the total contribution of the people to the support of the 
national government, and yet these lesser but direct con- 
tributions are subjected to a sterner investigation than 
those which are contributed to the nation. We also get 
proportionately more for our money through the State 
and municipal governments than we do from what we pay 
for the support of the nation, bad as the expenditures in a 
few of our great cities may be. 

The objects for which State and municipal governments 
are permitted to tax the citizens are very strictly limited, 
and in almost all the States a limit has been fixed beyond 
which cities and towns may not incur any obligations foi: 



VI INTRODUCTION, 

any purpose, without making out a clear case of necessity 
and securing specific legislation thereto. The rule laid 
down in the Supreme Court in the decision rendered by 
Judge Miller, to which reference is made in the subse- 
quent treatises, limiting the power of taxation to public 
purposes in the strictest sense, has been rigidly applied 
by the courts to States, towns, and cities. 

On the other hand, national extravagence and what are 
singularly named '' liberal appropriations," at the cost of 
tax-payers, receive support from small classes of very 
influential persons, and are treated with indifference by 
the great mass of the people. Subsidies and bounties to 
private undertakings are advocated and justified which 
would not be tolerated for a moment in any State or 
city administration. 

The expenditures of the government of the United 
States in the fiscal year ending June 30, 1891, after 
deducting the sum recovered from postal receipts, 
amounted to a little over five dollars per head of the 
population. These taxes are mainly collected upon arti- 
cles of common use, and they fall like the dew of heaven 
upon rich and poor alike in substantially even proportions 
according to number rather than by ability to pay. The 
consumption of wool and woollens, of cotton fabrics, of 
iron and steel, and other materials, of leather and 
lumber, of spirits, beer, and tobacco, and of all other 
articles from which revenue is collected in any consider- 
able measure, is very much "more uniform than the dis- 
tribution of property, real or personal, and also very 
much more uniform than the incomes of the people. 

If these national taxes were assigned to the several 
States, to be included with their own assessments, and 
collected under a system of direct taxation, even at the 
per capita rate of five dollars a head, the utmost scrutiny 



INTRODUCTION. Vll 

would be applied to the expenditures to which this vast 
sum of money might be applied. It Is very certain that 
under such conditions bounties to sugar planters would 
not have been granted ; the purchase of silver bullion at 
the cost of the tax-payers would be stopped ; the proposi- 
tion to build a great fleet of useless battle-ships would 
receive no consideration ; and the improvement of some 
obscure harbors in order to make them navigable for cat- 
boats, or the excavation of the channels of some rivers 
which are of no national Importance, would not even 
be suggested. 

The time had come when it became necessary to force 
the masses of the people of this country to give their 
attention to the methods of collecting and expending the 
national revenues. Two events have enforced the right 
attention. The tariff message of Grover Cleveland and 
the principles laid down therein have challenged the 
attention of the country, and will be sustained. The 
other event, which might not have sufficed to command 
general attention, except for the courageous act of Presi- 
dent Cleveland, is the enactment of the McKinley bill. 

It is an old and trite but yet true saying, that " whom 
the gods would destroy they first make mad." The Mc- 
Kinley bill, framed for the purpose of carrying into effect 
a so-called policy of " Protection with incidental revenue " 
contains within Itself the germs of Its own destruction. 
Public attention having at length become aroused to the 
importance of this subject, the demand for the facts in 
the case has become imperative. 

In the series of treatises which are reprinted in this 
volume, which first appeared in the Boston Herald, the 
New York Times, and other daily papers, I have endeav- 
ored to make an impartial statement of the account of the 
United States Government with the people ; I have also 



viii WTRODUCTION, 

endeavored as far as might be in my power, to bring the 
bearing and effect of our present system of taxation into 
conspicuous notice. Two official documents will soon 
appear by which my deductions and my conclusions may 
be tried. 

First, the exhaustive investigations of Commissioner 
Carroll D. Wright when fully reported will enable every 
one to discriminate between the rate of wages, or what 
may be called the price of labor, and the cost of that 
labor in each unit of product. It has been customary to 
deal with these two elements as if they were the same, as 
if a low cost of labor per unit of product necessarily 
ensued from a low rate of wages. In fact, the very 
reverse is apt to be true ; to wit, as stated in the treatises, 
high wages in money, or in what money will buy, are a 
correlative or result of a low cost of production per unit 
of product. 

When this principle of high wages corresponding to low 
cost of production is fully comprehended, the whole basis 
of the discussion of the tariff question will be profoundly 
altered. The most pronounced advocates of a policy 
intended for or directed toward the promotion of domes- 
tic industry, the protection of American labor, and the 
development of the home market, may find themselves 
almost before they are aware of it advocating radical 
measures of what is now called Free Trade ; that is to say, 
urging the abatement of all duties except those which are 
imposed for the sole purpose of collecting the necessary 
revenue with the least interference with the freely chosen 
pursuits of the people. 

The second report, which may even convert some of its 
promoters who least expect such an influence from it, will 
be the report which is now being drawn up under the 
direction of the Finance Committee of the United States 



INTRODUCTION, IX 

Senate upon the course of prices and wages in this and 
other countries for a long term of years. 

The writer ventured to give in advance the necessary 
conclusions which will be derived from this report when- 
ever it is made/ to some of the members of the Senate 
Committee when they were first laying out their work for 
this investigation. This report will prove that in this and 
in all other countries in which modern mechanism has 
been applied, or which have been opened to commerce by 
the railway and the steamship, the prices of the necessa- 
ries of life, with a few exceptions (the most notable excep- 
tion being the products of the forest), have fallen and are 
now almost as low everywhere as they were in a few 
States most abundantly supplied fifty years ago ; quick 
and ready intercommunication among nations having sub- 
stantially equalized prices the world over. This general 
tendency to a reduction in the prices of the necessaries of 
life has been subject to temporary upward fluctuations, 
especially under the influence of the Civil War in the 
United States and the disturbance of the world's mone- 
tary system which ensued then and for a time thereafter. 
This fall in prices has been as great if not greater in 
countries like Great Britain, in which there is no protec- 
tive element in the tariff, as it has been in the United 
States under the highest tariff ever imposed, or in France 
or Germany under a highly protective system. 

Again, this report will prove that there has been a 
steady rise in the general rates of wages in this and all 
other countries. Specific exceptions will be found, 
because the general rise in rates of wages has been accom- 
panied by a tendency of cities and towns to increase in 
population at the cost of the rural districts. Certain parts 

^ Since the above was written the Finance Committee has presented its 
Report in July. 



X INTRODUCTIOT^. 

of cities have become congested, and the problem of deal- 
ing with this lesser element or problem in what is known 
as " the labor question " has become one of greater and 
greater complexity. This report proving a general reduc- 
tion of prices and a general rise in the rate of wages, 
without regard to the tariff system of each or either 
country, will be quoted in support of one theory as well as 
the other, by the advocates of a high tariff and of a low 
tariff and by the representatives of tariff Protection and 
of Free Trade. 

But this report will probably contain one final summary 
which will be of the utmost service in the discussion of 
the tariff question ; or, if the report does not contain the 
table indicated hereafter, it will be very easy to make 
such a table from the data that will be given in it. 

The evil effect of duties upon the imports of crude 
and of partly manufactured materials consists in causing 
the price of these materials to be relativcly\v\^\^x year by 
year, or at the same date in the country which imposes such 
duties, than in countries in which they are free of taxation. 

The way to prove this will be to give lists of the prices 
at wholesale of all the crude materials which enter into the 
process of manufacturing, and of all the principal articles 
of food in two or three of the chief markets of Europe 
and in two or three of the principal cities of the United 
States, putting between these columns of prices the rates 
of duty which may have been imposed upon each of 
these commodities by each country in each and every 
year covered by the record. 

From this comparison, line by line, and year by year, 
the effect of each tariff of either country upon the rela- 
tive cost of the materials which enter into the process of 
manufacturing and of the principal articles of food, will 
be fully disclosed. This table will cnal^U^ c\-er\' one to 
determine in the simplest and surest manner whether true 



INTRODUCTION. XI 

Protection for domestic industry can be most fully assured 
by exempting materials and food from every form of 
taxation, or by putting heavy taxes on materials and 
food which may be of foreign origin to the relative dis- 
advantage of the country that imposes the tax. This 
table will also enable every one to determine whether the 
McKinley bill protects the industry of this country, or 
whether it promotes the manufacturing supremacy of 
other countries. 

When the tariff question is brought down from the 
glittering generalities and the specious and plausible argu- 
ments commonly presented, to this simple question of 
the relative condition in which it places the workmen of 
each and every country, the conclusion of the discussion 
and the final decision will not be far off. 

The first step has been taken at the Republican con- 
vention for bringing about a repeal of the McKinley bill, 
and for substituting a well-adjusted measure of tariff 
reduction. This may not be what was intended either by 
the Committee on Resolutions, or by the Chairman of the 
Convention, Mr. William McKinley, Jr., himself. The 
framers of the resolution may not comprehend its pur- 
port any more than Mr. William McKinley, Jr., compre- 
hends the tariff question. 

The plank in the Republican platform on the tariff, if 
logically construed, would render it necessary to bring in 
a more radical searching, and complete measure for the 
repeal of the McKinley tariff, and the enactment of a 
very low tariff, than has been contemplated by any judi- 
cious person in the Democratic party. The resolution of 
the Republican platform is as follows : 

*' Resolved, That on all imports coming into competition 
with the products of American labor should be levied 
duties equal to the difference between the wages abroad 
and at home." 



Xll INTRODUCTION. 

Whatever may have been the intention of the framers 
of that resolution, if it were carried into effect, it would 
bring about a reduction in the duties imposed under the 
present tariff more rapidly than has been contemplated 
either in the Morrison bill, the Mills bill, or any other 
measure that has been framed by the promoters of tariff 
reform. This resolution will bring the discussion out 
from the glamour of crude theory down to simple ques- 
tions of fact. 

Throughout the campaign about to ensue every Repub- 
lican speaker should be compelled to adhere to the terms 
of this resolution, and to deal with the problem of tariff 
reform consistently with it in a broad and general way, 
subject to exception only in respect to the finer fabrics 
which depend upon style, fashion, and fancy for their sale. 

The labor cost of manufactured goods aside from the 
cost of materials, general expenses, and other charges, 
ranges from twenty per cent, in coarse textile fabrics up 
to thirty and thirty-five per cent, on the medium grades 
of this class of goods on which so large a part of taxation 
is imposed. In respect to articles made of metal, the 
labor cost ranges from twenty-five to fifty per cent. ; in 
some relatively unimportant articles like watch-springs it 
is more. Materials are assembled from all parts of the 
world, but in dealing with a protective tariff, whether we 
' are dealing mainly with the labor cost in the factory or 
in the workshop, it must be remembered that our duties 
are now imposed on the gross value, including not only 
labor but materials and general expenses, and in many 
instances in the McKinley tariff bill the duties exceed 
one hundred per cent, upon the gross value. 

Any one who affirms that these duties were adjusted 
to compensate for any difference in labor will have to 
meet the charge of insincerity or absurdity. Even if a 



INTRODUCTION. xiii 

difference in the rates of wages such as has been proved 
to exist in this series of treatises corresponded to a simi- 
lar difference in the cost of labor, the general rate of 
duties in the McKinley bill would have to be reduced 
more than one-half to make it consistent with the tariff 
plank in the Republican platform. In a broad and gen- 
eral way, counting the labor cost at one-third of the fabric 
and computing the foreign labor cost at one-half what it is 
here, which would correspond to the utmost claim ever 
made, even then a rate of duty of fifteen to twenty per 
cent, would correspond to the terms of the tariff plank 
in the Republican platform. 

In other words, when the taxes are removed from the 
crude and partly manufactured materials which are neces- 
sary in the processes of our domestic industry, we shall 
compete either on even terms or at an advantage with 
other countries. When that time comes, the application 
of the Republican plank may only be made to the labor 
cost in the factory or workshop ; the attempt to com- 
pensate for an alleged difference in the labor cost of ma- 
terials being a manifest absurdity. When the question 
is narrowed down to a definition or measure of the differ- 
ence in wages between this and other countries, nothing 
will be found of any material importance upon which a 
duty exceeding twenty-five per cent, could be justified, 
and even that would be an unreasonable concession to the 
fear of immediate competition rather than a rate that 
could be justified on any actual difference in labor cost 
where any exists. Mr. E. B. Bigelow, the framer and 
chief promoter of the present tariff on wool and woollens in 
its first phase, was fully cognizant of these facts when he 
said that '' any branch of industry which could not be 
sustained by a protective tariff of twenty-five per cent, 
ought to cease to exist." 



XIV INTRODUCTION. 

The promoters of McKinleyism may be compelled to 
meet this issue by the simple question, What is the exact 
difference between wages abroad and at home in each import- 
ant class of goods upon which duties are now assessed 1 

The first questions to be put to those who may support 
the McKinley bill in disregard of this plank in the Repub- 
lican platform may well be these : Dealing in the first 
instance with the imports in Class A, '^Articles of food 
and live animals^'' each man should be asked, What is the 
difference in labor between the wages abroad and at home 
in the production of breadstuffs ? Of course, no honest 
man can reply except by saying that the element of 
wages in the production of breadstuffs in the United 
States is less than it is in any other country, whatever the 
rate may be. Therefore, according to this Republican 
declaration, breadstuffs should be put at once into the 
free list. The next question should be — What is the 
difference between the wages abroad and at home in the 
product of provisions, including meat, butter, and cheese.? 
When the resolution laid down in the Republican plat- 
form is applied to these articles they must be put at once 
into the free list. The same rule will apply to vegetables. 
The malignant duty upon potatoes is not and cannot be 
justified by any difference in the wages of the labor cost 
of the production of potatoes between this and any other 
country. 

Passing next to Class B, ''Articles in a crude condition, 
wJdcJi enter into the various processes of domestic industry ,'' 
on the first application of the principle laid down in 
the Republican platform, which states that there should 
be no duty on any product, except one equal to the dif- 
ference between wages at home and abroad, we must 
immediately put coal and coke into the free list. Next, 
the duty upon iron ore must immediately be removed, 



INTRODUCTION, XV 

because wages in Pennsylvania, according to the sworn 
statements of the owners of the mines give the cost of 
labor in each ton of iron ore at seventy-five cents per ton : 
the present duty is seventy-five cents per ton ; that is to 
say, it is one hundred per cent, more than it should be ac- 
cording to the Republican tariff resolution, for the reason 
that the labor cost in the production of iron ore, espe- 
cially at the point of largest production in Pennsylvania, 
is less than it is anywhere else in the world from which 
any supply of ore could be derived. 

When the principle laid down in the Republican plat- 
form is applied to pig-iron, it will be necessary to reduce 
the present duty lower than has yet been proposed in any 
measure submitted by the Democrats, if not to take it off 
altogether. The one difBculty in the matter is this, with 
reference to pig-iron and steel ingots, there is not a mem- 
ber of the Republican Committee on Ways and Means, 
which framed the McKinley bill, including Mr. McKinley 
himself, who can state what the difference is between the 
wages abroad and at home in the production of pig-iron 
and ingot steel. 

The allegation has been made that most careful consid- 
eration was given in framing the McKinley bill to this 
element, and that it was framed to meet the terms and 
conditions of what is now the principal plank in the Re- 
publican platform. This statement is not true in fact, 
whatever the intention of the framers may have been. The 
bill is wholly inconsistent with this rule. 

There are many places in this country where the differ^ 
ence between wages at home and abroad in the production 
of pig-iron and steel is in favor of this country : this cost 
of labor is less, and in some places the rates of wages are 
less, than in some places in Europe. Both articles are 
made in a large way, if not universally, at a less labor cost 



XVI INTRODUCTION, 

in this country than they are now in other countries. 
This is proved by the fact that the representatives of the 
principal works, where it is well known that these pro- 
ducts are made at least cost, have not disclosed the facts 
to Commissioner Carroll D. Wright. Therefore, while his 
answers to this question may show a slight excess in the 
labor cost in this country as compared to others, such is 
not the fact. If the facts were disclosed as to the cost of 
labor of iron and steel at the most favorable points in this 
country, in the largest and most effective works, they 
would prove that under the application of the principle 
laid down in the Republican platform, pig-iron and crude 
steel should be put at once into the free list because this 
advantage in labor is with us. 

Dealing next with the article of wool, the difference 
between the wages in this country, say in Texas and 
other parts of this country where sheep are raised in 
great flocks, in comparison with Australia and New 
Zealand, even in rate is in our favor, if lower rates are 
favorable. The rate of wages in Australia and New 
Zealand is higher, whatever the labor cost may be. 

There is, however, not a single man who sustains the 
McKinley act, or among its framers, who can tell what 
the labor cost of wool is in any one season in this or in 
any other country, because it varies so greatly, season by 
season. 

There is not a man on the Republican side who can sus- 
tain the duties on wool consistently with the principle 
which is laid down in the Republican platform. If they 
apply that principle they will only be compelled to put 
wool and a great variety of woollen and cotton goods into 
the free list. 

In fact, the application of the Republican principles 
laid down in the platform for an adjustment of duties to 



IN TROD UCTION, XVll 

the difference in labor between this and other countries, 
would result in a measure of too revolutionary a kind to 
warrant the approval of any judicious man, under the pres- 
ent conditions to which the long existence of a very high 
tariff has brought many arts in this country. This strict 
application would bring about a more rapid approach to 
absolute Free Trade in the English use of that term, than 
would be wise or safe under any single measure, or by any 
single act of legislation. 

Under these conditions it would be judicious for all 
advocates of tariff reform who desire to follow that single 
issue safely and surely, to put the candidates on the Re- 
publican side to the question for the purpose of determin- 
ing several points : 

FIRST, whether each one comprehends the plank upon 
the tariff in the Republican platform ; 

SECOND, whether or not they know or can get informa- 
tion from the leaders as to what the difference in labor 
between the wages abroad and at home actually is ; and, 

THIRD, whether they are in fact prepared to reduce the 
duties to that measure or to take them off wholly where 
the cost of labor is less in this than in any other country. 

If Republicans are prepared to act on this resolution 
and to apply it according to its strict construction, the 
only work which will be left for the Democratic or Inde- 
pendent tariff reformers will be to prevent the Republican 
party from undertaking the reduction of the tariff in such 
a radical way as to promote a reaction that will be injuri- 
ous to the whole cause of tariff reform. 

Edward Atkinson. 

Boston, June i6, 1892. 



TAXATION AND WORK, 



CHAPTER I. 

Occupations. Distribution of Products. 

In The Forum, for September, 1891, the writer pre- 
sented a condensed statement of the income and expen- 
diture of the United States for 'the fiscal year ending 
June 30, 1889, in the customary form of an account cur- 
rent such as every merchant or banker renders to his 
correspondents who trust their money or merchandise in 
his control. It were well that the government of the 
United States should be held to the same form of ac- 
countability, as the national taxes are placed in its hands 
under the same conditions of trust. 

Nothing is more common in pubHc discussion, espe- 
cially on the part of very sincere men who represent what 
is called Nationalism, Collectivism, and other more or less 
mild forms of SociaHsm, Despotism, or Communism, than 
to impute to the State the possession of an immense prop- 
erty which it should deal with in a so-called liberal 
manner. Again, nothing is more common than for shal- 
low and unthinking men, even in business life, to advocate 
'* liberal appropriations " by Congress for bounties, subsi- 
dies and expenditures of all kinds that are esteemed 
semi-public enterprises, but are in fact undertaken mainly 
if not wholly for private gain. 

z 



2 TAXATION AND WORK, 

Now the State, in the sense in which that word is used 
to designate either the nation, or each separate member 
of the Union — or the city or the town — possesses no 
property except pubhc buildings, which have been paid 
for out of taxes, and the unsold portions of public lands. 
The income of the State is wholly derived from taxation 
and all its funds are held in trust for the public service 
only. It can impropriate or become possessed of property 
only by way of taxation. 

The very definition of a tax in the dictionary, by which 
a court must be governed in the construction of revenue 
acts, is " a rate or sum of money assessed on the person or 
property of a citizen by government for the use of the 
nation or state." 

The definition of a duty is also '■'■ an impost, customs, 
tribute, or taxT Some persons hold that '' a tariff is not 
a tax." A tariff is only a list of taxes or duties. There 
is no difference between a duty or a tax in law or equity, 
and no distinction can be made. All the fallacies about 
putting our burdens upon other nations by taxing imports 
may be set aside. A duty is a tax and all the taxes that 
the government receives the people pay ; when such taxes 
are badly assessed the people may pay a great deal more 
than the government receives ; or what is perhaps worse, 
many people may be deprived of the opportunity to apply 
their work in the most productive way by a bad system 
of taxation. 

Taxation is but one of the several methods by which 
the annual product of the community is distributed. 
These methods of distribution are named : Rents, Profits, 
Interest, Salaries, Earnings, Wages, Stealings, and Taxes. 

The annual product, which is the subject of such dis- 
tribution, is the measure or result of the annual work, 
whether the work be mental, manual, or mechanical. It 



OCCUPATIONS, DISTRIBUTION OF PRODUCTS, 3 

corresponds to the effective work or exertion of produc- 
tive energy of that part of the population which does the 
work, numbering about one in three of the population — 
such being the proportion occupied for gain. The aggre- 
gate of taxation — national, State, county, city, and town, — 
so far as the writer has been able to compute it, comes to 
about six or seven per cent, of the product ; it therefore 
represents six or seven per cent, of the whole work of the 
community, to which all contribute in ratio to their con- 
sumption or use of subjects of taxation. National taxes, 
including postal service, come to more than one-half the 
total burden. 

Out of our present population of over sixty-five mil- 
lions (65,000,000) there are about twenty-three millions 
(23,000,000) who are at work in the sense of being '' occu- 
pied for gain " in professional and personal service, trade 
and transportation, manufacturing, mechanic arts and 
mining, and agriculture. Their average earnings which 
are the measure of the value of their product may be at 
the rate of two dollars a day for three hundred days in 
the year — six hundred dollars* worth for each group of 
three persons. But there are a vastly greater number, 
probably ninety per cent, of all who are occupied for 
gain, who secure less than that sum than there are who 
secure more in the distribution of the product. 

The average product of the whole working community 
— mental, manual, and mechanical — includes, of course, the 
share of the product which falls to capital as well as to 
labor — to the administrative as well as the working force. 
It represents a division of the total product at its final 
valuation by the total number who share the work in any 
way. 

In 1880 the list of persons who were occupied for gain 
was made out under four titles and under each of these 



4 TAXA TION AND WORK. 

titles the subdivisions were given. The subsequent vari- 
ations in the ratio of one class to another have not been 
great. If we apply the proportions of 1880 to the work- 
ing force of the present day, computed at 23,000,000 
men, women, and young persons, we get the following 
results : These are approximately in each thousand 
persons the following divisions of occupations : 

1. Clergymen, lawyers, doctors, chief officers of banks, railroads, 

insurance companies, and the like, whose work is mental or 
administrative ... 40 

2. Merchants, tradesmen, hotel keepers, clerks, salesmen, sales- 

women, etc 60 

3. Work of a collective kind conducted in factories and workshops, 

textile, iron or steel, machine shops, boots and shoes, etc., etc. 100 

4. Mechanical work of an individual order, carpenters, masons, 

blacksmiths, etc 107 

5. Personal service — Domestic servants, draymen, railways and ex- 

press, sailors, waiters, etc 131 

6. Laborers on farms, laborers not specified, and laborers in mines, 

etc 312 

7. Agriculturists — Farmers, stock raisers , 250 

Total 1,000 

I think that $600,000 worth of product is now the 
average annual value of the result of the average work of 
each thousand persons who are occupied for gain sub- 
stantially in these proportions ; upon each one of these 
two others depend. At this ratio our present annual 
product, measured in gold, comes to $13,500,000,000. 

Every tax imposed by nation, State, town, or city is a 
demand on the community to give so many days' work 
to be devoted to the service of the State. If we adopt 
two dollars a day as the unit of labor by which to measure 
taxation, the analysis of the cost of the government of 
the United States may become a little more interesting 
to the masses who are taxed " unbeknownst like *' for its 
support, it being observed that all so-called " indirect " 
taxes, that is to say, all taxes which are put upon articles 



OCCUPATIONS. DISTRIBUTION OF PRODUCTS, 5 

which enter into common consumption, are paid by con- 
sumers in proportion to their consumption of such 
articles. 

It being assumed that no great change has occurred in 
this distribution of occupations since 1880, the present 
numbers who bear the burden of taxation are as follows : 

Class I. Clergymen, lawyers, administrative officials of corpora- 
tions, etc., etc 920,000 

Class 2. Merchants, clerks, and other distributors 1,380,000 

Class 3. Factory operatives and others in collective work 2,300,000 

Class 4. Mechanics working individually rather than collec- 
tively 2,461,000 

Class 5. Personal service of all kinds 3,013,000 

Class 6. Laborers 7,176,000 

Class 7. Farmers, f . ...» t .. 1 1 1 1 ...»•. f 1 1 #.. t ... . 5,750,000 

23,000,000 
Computed population over. 65,000,000 

If the joint product of this great body by whom the 
work of the country is done can be computed at two 
hundred dollars' worth per head, or at six hundred dollars' 
worth for each one of the twenty-three million persons 
by whom the work is done, then that product is the source 
from which all rents, profits, interest, salaries, earnings, 
wages, stealings, and 

TAXES 

are derived. Taxation and work are therefore synony- 
mous terms or different words for the same thing. 



CHAPTER II. 

Taxation Measured by Work. 

In the previous chapter an approximate computation 
was given of the value of our annual product. Given a 
certain measure of such product — then it follows that by 
so much as some persons secure a larger share of the whole 
— by so much must the share of the others be reduced. 
The share or proportion which must be assigned to the 
support of government is taken from those who do the 
work of the country in proportion to consumption and 
not in ratio to the work done. The case may be stated 
in other terms. A certain part of every person's work 
must be devoted to the support of the government, and 
since the revenues are derived mainly from the taxation 
of articles of common consumption, therefore the cost of 
government is put upon the people in proportion to their 
consumption of the subjects of taxation rather than in 
proportion to their personal incomes. 

THE CASE STATED. 
In order to make this case of Taxation and Work clear, 
we will first give a statement of the expenditures of the 
government in the fiscal year ending June 30, 1891, meas- 
ured by men's work for one year of three hundred days 
at two dollars per day ; we will then deal with the subject 
by the customary method in terms of money. It might 
be suitable to make this computation at a less rate per day, 
since national taxes upon articles of common consumption 

6 



TAXATION MEASURED BY WORK. 7 

are paid in largest measure by people of moderate incomes 
of less than $600 for each working group of three, or less 
than $1,000 for each family of five. It is probable, to say 
the least, that the actual cost of government when stated 
in terms of work would be one-fifth greater in number of 
men occupied in each year, than the figures which are 
given in the subsequent tables. This will become appar- 
ent by recurring to the sorting of occupations in Chapter 
I., taking observation of the great proportions of laborers, 
mechanics, factory operators, and persons engaged in per- 
sonal service as compared to all others. 

The best way to put this case is in the customary form 
of an account current. 

The United States, Debtor to the People. 

By men 

Worth of work. numbering. 
For work done for the support of the Civil 
Service, Legislative, Financial, Judicial, 

Executive, etc $103,360,086 40 172,266 

For the support of Army, Forts and Guns. 39,800,799 74 66,335 

For the support of Navy. 15,867,390 53 26,465- 

For the construction of Ships of War 10,609,197 15 17,682 

For the improvement of Rivers 8,760,464 71 14,600 

For the improvement of Harbors 3,490,162 52 5,817 

For the interest on the Public Debt 37,547,135 37 62,578 

For the refund of Direct Taxes to States. . . 11,521,496 92 19,202 
For the Pensions : First Payment and Pen- 
sion Roll 124,415,951 40 207,860 

For the Surplus applied to Payment of Debt 37,239,762 57 62,966 

For the Postal Revenue 65,931,78572 109,886 

Total $458,544,233 03 764,257 

Which sum represents the work of 764,257 men for one year of three hun- 
dred working days at two dollars per day each. 

In other words, it required the full year's work of about 
765,000 men to support the President, Cabinet Officials, 
Legislators, Judges, Tax Gatherers, Postmasters, Soldiers, 
Sailors, and others who perform the actual work of the 
government ; including also the pensioners and the claim 
agents who batten upon them, and all others who get their 
living out of or by direct payment from the government. 



8 TAXATION- AND WORK, 

In addition to this sum, under present laws the govern- 
ment will tax the people in the next fiscal year for some 
other purposes, to wit : 

For the payment of bounties to sugar-planters and maple-tree tap- 
pers, about ten million dollars ($10,000,000) representing men's 
work for three hundred days at two dollars, to the number of. 16,666 

For the purchase of four million dollars' worth of silver bullion per 
month, to be stored in the vaults of the Treasury, forty-eight 
million dollars ($48,000,000) 80,000 



96,666 
Adding these last items the facts will show about eight 
hundred and sixty thousand men now working for the 
support of the government and for the support of those 
to whom bounties are to be paid ; or, what is nearer the 
truth, every one who is at work in every occupation is 
forced to continue the effort so much longer, or to work so 
much harder, as the cost of the government is in ratio to 
the total consumption of taxed articles by every one Avho 
does any work — mental, manual, or mechanical. 

This cost represents nearly four per cent, of all the 
work that is done by all the people. The work done to 
support State and municipal governments is somewhat 
less. It may come to two or three per cent. When we 
get the full census figures we may secure a more adequate 
measure. In 1880 the writer computed the ratio of all 
taxation to product at about seven per cent. Since then 
the product has increased, but taxation has somewhat 
diminished, in ratio to the product. If the taxes were 
rightly framed and rightly spent we might not complain. 
Compared to other countries the burden is very light, 
although in many ways we do not get as much for our 
money, especially in cities, — but that subject is aside from 
my present purpose. 

According to the Blue Book lately issued by the gov- 
ernment, the total number of persons employed in its 



TAXATION- MEASURED BY WORK. g 

service, omitting postmasters, was over 160,000, to whom 
must be added the men in the army and the navy, making 
a total of about 200,000. The number of mechanics and 
laborers who are employed upon public works cannot be 
computed. 

In dealing with the cost of government in terms of 
work it will be observed that we may rightly compute the 
number occupied in the service itself and also the number 
occupied in making provision for their support. It is not 
held that the work of government is not necessary and 
conducive to production, but it represents so much energy 
diverted from actual production. If men actually gov- 
erned themselves, then all who are now in the service 
would be producing something for personal use or ex- 
change, and there would be no taxes to pay. The remis- 
sion of work now exerted for and by the government 
would then be substantially that of a number of men con- 
siderably exceeding one million. 

In other words, if there are now about 23,000,000 men, 
women, and children occupied for gain in all the arts of 
life, including the support of the government, we may 
very surely assume that very nearly if not quite five per 
cent, of the actual work or energy of the people is 
expended in the processes of the national government. 



CHAPTER III. 

Taxation Measured in Money. 

We may now deal with the public expenditures in the 
customary way in which a custodian of other people's 
money should render his account. In the vernacular a 
good many people desire to ask Uncle Sam what he has 
done with the product of their work. Uncle Sam replies 
in the following terms : 

THE GOVERNMENT OF THE UNITED STATES, 

In account with THE TAX PAYERS. 

EXPENDITURES, 

The total expenditure of the government in the fiscal year 
ending June 30, 1891, including the postal service, 
amounted to $421,304,470 46 

Recovered from postal service in compensation for carrying 

mails 65,931,785 72 

Remainder $355,372,684 74 

Customs revenue returned in Rebates, Drawbacks, etc. . . . 11,937,408 79 

Net expenditure ._ $343,435,275 95 

Amount of extraordinary expenditures in the specific year 

ending June 30, 1891, which will not recur again : 
Refund to States of Direct Taxes levied 

during the war $11,521,496 92 

Cost of Eleventh Census 5,942,977 13 

$17,464,474 05 

Remainder representing the true cost of government for 

fiscal year ending June 30th, 1891 $325,970,801 90 

Expenditures in that year which will recur and for which 
provision must be made from year to year, but which 
are not a part of the normal or true cost of govern- 
ment : 

Pensions a little less than one-third for first payments 

which once paid are final 124,415,951 40 

10 



TAXATION MEASURED IN MONEY, II' 

The true pension roll or payments which are recurrent until 
death amounted to less than $80,000,000. It is proba- 
ble that all claims under existing acts will have been 
audited before June 30, 1894, when all first payments 
will have been liquidated. The annual pension 
change will then fall off one-third or more. 

True cost of government . $201,554,850 50 

Expenses of a variable but continuous character, to be re- 
peated year by year at the will of each Congress, ac- 
cording to the ability of the country to bear taxation : 

On Public Buildings $4 811,822 16 

On Rivers > 8,760,464 71 

On Harbors 3, 490, 162 52 

On Naval Vessels 10,609,197 15 

$27,671,646 54 
Disbursements which will be ultimately re- 
covered : 
Interest advanced on bonds issued to Pacific 
R. R., to be repaid by them and now 
recovered in part, year by year, and 
accounted for in the miscellaneous re- 
ceipts of the Treasury, 

$5,408,871 12 
Sinking Fund Union Pacific R. R. 

$1,837,098 45 
Sinking Fund Central Pacific R. R. 

$481,191 25 

$7,727,160 82 

Continuous expenditures on the whole 
lessening year by year : 

Interest on public debt $32,138,264 25 

Indians, support of 8,527,469 01 

Soldiers' Homes, support of 3,599,199 81 

$79,663,740 43 

Normal or true cost of government which is not subject to 
any great variation and which is diminishing in ratio 

to population 121,891,110 07 

Legislative Department $7,471,598 44 

Executive Department , 174,897 20 

State Department 2,170,047 47 

Treasury Department 29,216,319 86 

Interior Department 15,271,705 34 

Agricultural Department 1,797,147 16 

Department of Labor 143,682 50 

Department of Justice 810, 112 74 

Judiciary 5,808,080 77 

Postal Deficiency 6,958,528 14 

Army 36,201,599 93 

Navy 15,867,390 52 

$121,891,110 07 



iT, TAXA tlON AND WORK, 

It will be observed that the true cost of the govern- 
ment was $121,891,110.07, and that the expenditures of a 
constructive order which will be constant for many years, 
varying and lessening in amount at the will of each Con- 
gress, were $79,663,740.43. These two sums taken to- 
gether give all the expenditures which are of a recurrent 
description and which may be called normal, to which 
pensions are to be added : 

Normal $201,554,850 50 

Pensions 124,415,951 40 

Total $325,970,801 90 

Upon this analysis of the true expenditures of the 
fiscal years ending June 30, 1891, future expenditures 
may be predicated. 

Having credited the government with these expendi- 
tures, we may now take up the debit side of the account. 

Taxation and work are two names for the same thing. 
How much money's worth is to be charged to the 
government and what were the sources or subjects of 
taxation from which its revenue is derived are given below. 

The subjects of taxation and the revenue from each 
class are concisely given in the Annual Report of the 
Bureau of Statistics of the Treasury Department upon 
imports entered for consumption 

RECEIPTS AND THEIR SOURCES. 

Customs Revenue. 
SOURCES. 1890, 1891. 

Duties on Merchandise — 
Class A — Articles of food and live animals. 

Animals $651,12600 $589,00200 

Breadstuffs 1,148,61100 894,64800 

Fish 674,642 00 893,967 00 

Fruits, including nuts 3,915,470 00 4,343,622 00 

Provisions, including meat and dairy 

products 494,268 00 636,215 00 



TAXATION MEASURED IN MONEY. 1 3 

SOURCES. 1890. 189I. 

Rice 1,632,078 00 2,006,258 00 

Salt 394,21500 408,79000 

Sugar and molasses 55,150,81900 32,468,33900 

Vegetables 1,008,73900 2,523,03000 

All other 748,28600 782,50300 

Total Class A $65,818,25400 $45,546,37400 

Class B — Articles in a crude condition which enter into the various pro- 
cesses of domestic industry. 

Coal and coke $712,630 00 $804,845 00 

Flax, hemp, and other vegetable fibre .. 2,419,797 00 697,224 00 

Hops 515,75800 543,11000 

Iron and Steel — 

Ores 868,77600 721,38300 

Pig-iron 995,032 00 550,902 00 

Scrap iron 254,01 7 00 370, 754 00 

Steel ingots, cogged ingots, etc 546,466 00 653,040 00 

Lead ore, pigs and bars 50,701 00 822,901 00 

Marble in block, rough or squared 251,501 00 250,369 00 

Seeds — Castor, linseed, poppy, and 

garden 619,802 00 520,027 00 

Wood — Pulp 177,339 00 216,893 00 

Wools, raw and mungo, flocks, etc 5,959,412 00 6,758,795 00 

All other 689,449 00 735, 141 00 

Total Class B $14,060,68000 $13,645,38400 

Class C — Articles wholly or partially manufactured, for use as materials in 
the manufactures and mechanic arts. 

Cement $435,63100 $830,31100 

Chemicals, drugs, etc 4,653,683 00 4,431,446 00 

Cotton thread, yarn or warp yarn, not 

on spools 409,346 00 425,575 00 

Flax or hemp yarn or thread 342,826 00 363,982 00 

Furs, dressed on the skin, and hatters' 

furs 1,071,07200 1,312,00100 

Iron and Steel — 

Tin-plates 6,746,64500 10,577,11500 

All other 2,203,933 00 1,830,640 00 

Leather 957,575 00 985,08900 

Paints and colors 429,869 00 439,717 00 

Silk, partially manufactured from co- 
coons, etc., spun silk, etc 265,949 00 627,804 00 

Wood, manufactures of 1,203,49000 1,149,13200 

Woollen and worsted yarns 1,270,08700 1,141,55700 

All other 1,251,61600 1,025,11400 

Total Class C $21,241,72200 $25,139,48300 



14 TAXA TION AND WORK. 

SOURCES. 1890. 189I. 

Class D — Manufactured articles, ready for consumption. 

Books and other printed matter $713,859 00 $621,606 00 

Brushes of all kinds, etc 225,219 00 313,372 00 

Buttons 665,14600 525,94900 

Carriages, and parts of 158,509 00 209,291 00 

Clocks and watches, and parts of 547,909 00 604,626 00 

Cotton, manufactures of 6,783,43800 8,721,94400 

Earthen, stone, and chinaware 4,005,745 00 4,660,477 00 

Flax, hemp, etc., manufactures of 8,685,735 00 7,935,059 00 

Glass and glassware 4,215,839 00 4,532,220 00 

Iron and Steel — 

Cutlery 1,139,76600 861,07600 

Machinery 1,232,267 00 1,255,661 00 

All other 1,397,270 00 1,439,600 00 

Leather — Gloves and other manufactures 

of 2,838,628 00 3,159,924 00 

Metals, not elsewhere specified, com- 
positions and manufactures of 1,152,949 00 2,390,394 00 

Paper, and manufactures of 542,393 00 871,519 00 

Straw, manufactures of 22,775 00 247,192 00 

Wood, manufactures of , 640,646 00 822,102 00 

Wool, manufactures of — 

Carpets and carpeting 790,754 00 829,064 00 

Cloths 11,702,13400 10,537,96900 

Dress goods 16,490,94800 16,616,30200 

Flannels 854,813 00 295,293 00 

Wearing apparel — 

Clothing, ready-made, cloaks, dol- 
mans, etc 1,010,13400 1,524,94700 

Hats 5,23600 12,51100 

Knit fabrics 1,242,65600 779,09900 

Shawls 628,043 00 509, 162 00 

Webbings, gorings, etc 359,038 00 300,577 00 

All other wearing apparel 2,587,681 00 2,104,807 00 

All other. ... , ,, 2,197,67300 1,655,32700 

Total class D $72,837,20300 $74,397,070 00 

Class E — Articles of voluntary use, luxuries, etc. — 

Art works — Painting and statuary $445,934 00 $287,807 00 

Cotton laces, edgings, and embroideries, 4,498,785 00 5,799,291 00 

Fancy articles — 

Dolls and toys 727,16800 776,78100 

Feathers and downs 465,226 00 447,581 00 

Feathers and flowers, artificial 589,638 00 670,736 00 

Perfumery, cosmetics, and toilet arti- 
cles 283,57900 300,61800 

Pipes and smokers' articles 173,484 00 233,373 00 

All other 844,67900 378,91400 

Firecrackers..,, 273,00100 439,52000 



TAXATION- MEASURED IN MONEY. 



15 



SOURCES. 1890. 189I. 

Flax and Hemp — 

Laces, edgings, embroideries, etc.... 434,201 00 1,078,195 00 

Jewelry and precious stones 1,466,131 00 1,505,803 00 

Liquors — 

Malt liquors and extract 726,683 00 835,922 00 

Spirits, distilled 3,129,42400 3,437.571 00 

Wines 4,662,00400 5,147,76500 

Musical instruments 432,882 00 475.203 00 

Silk, manufactures of — 

Dress and piece goods 5,370,098 00 5,225,348 00 

Handkerchiefs 105,13800 323,47000 

Laces, embroideries, etc 1,907,596 00 1,797,205 00 

Ribbons , 1,026,59300 896,76500 

Velvets, plushes, etc 2,535,244 00 2,843,264 00 

Wearing apparel 626,545 oo 1,429,481 00 

Webbing, goring, suspenders, etc 180,901 00 360,759 00 

All other ,- 6,927,69000 5,857,06800 

Tobacco and manufactures of 13,317,36800 16,172,27700 

All other ,,,. 209,25500 341,65800 

Total class E $51,359,21700 $57,062,37500 

Total duty collected — 

Regular $225,317,076 00 $215,790,686 00 

Additional and discriminating ai, 222, 961 00 <5i,095,oi5 00 

Total dues collected on merchandise $226,540,037 00 $216,885,701 00 

Tonnage tax 565,86010 520,33346 

Miscellaneous 2,562,68747 2,116,17077 

Total customs revenue $229,668,584 57 $219,522,205 23 

a Of this amount $1,102,645 was duty equivalent to internal revenue tax. 
b Of this amount $974,360 was duty equivalent to internal revenue tax. 



Internal Revenue. 

Tax collected on — 

Spirits $76,539,00262 $79,626,09351 

Tobacco.... 32,443,50992 32,573,73574 

Fermented liquors , 25,494,798 50 28,192,327 69 

Oleomargarine 619,205 72 871,488 44 

Special taxes on manufacturers, dealers, 

etc., and miscellaneous 7,510,189 05 4,422,604 06 

Total internal revenue $142,606,705 81 $145,686,249 44 

Postal Service. 
Revenue from $60,882,097 92 $65,931,785 72 



l6 TAXA TION AND WORJC, 

Miscellaneous. 

SOURCES. 1890. 1891. 
Profits on coinage, bullion, deposits, and 

assays $10,217,24425 $7,701,99182 

Sales of public lands 6,358,272 51 4,029,535 41 

Fees — Consular, letters-patent, and land, 3,146,692 32 3,019,781 84 

The District of Columbia. , . 2,809,130 93 2,853,897 74 

Sinking Fund for Pacific Railways. .... 1,842,564 52 2,326,359 37 

Tax on national banks 1,301,326 58 1,236,042 60 

Customs fees, fines, penalties, and for- 
feitures 1,299,324 52 966,121 82 

Repaymentof interest by Pacific railways, 705,691 52 823,904 04 

Sales of Indian lands 372,288 15 602,545 3^ 

Nashville and Chattanooga Railroad 

Company 500,000 00 

Soldiers' Home, permanent fund 308,886 99 308,648 34 

Immigrant fund 241,46400 292,27100 

Tax on seal skins 262,50000 269,67388 

Sales of government property. 192,123 99 259,379 05 

Deposits for surveying public lands 112,314 79 131,422 80 

Sales of ordnance material 122,668 01 

Sales of condemned naval vessels .. 78,037 36 

Depredations on public lands 35,852 37 55, 905 83 

Other miscellaneous sources 1,600,014 81 1,825,806 35 

Total miscellaneous $30,805,692 25 $27,403,992 64 

Total receipts. 463,963,080 55 458,544.233 03 



CHAPTER IV. 
Principal Sources of Revenue. 

The startling fact which appears upon the first analysis 
of the sources of the national revenue is that what are 
known as the miscellaneous permanent receipts of the 
government which are derived from other sources than 
the ordinary internal and customs taxes, averaging twenty- 
five million dollars a year, when combined with the 
revenue from domestic and imported liquors and tobacco, 
sufficed to cover, within a small fraction, all the expendi- 
tures of the government of every name and nature 
except the disbursements for pensions in the fiscal year 
ending June 30, 1891, and will more than suffice for the 
same purposes in the present fiscal year which will termi- 
nate June 30, 1892. 

In other words the revenue now derived from miscel- 
laneous permanent receipts is now in excess of the interest 
on the public debt and the. revenue from liquors and 
tobacco is now in excess of the disbursements for the 
civil service, — the judiciary, the army, the navy, public 
buildings, fortifications, the construction of naval vessels, 
rivers, harbors, the support of Indians and even the prob- 
ably unconstitutional and wholly unlawful misappropri- 
ation of the revenue to bounties to sugar planters and 
maple-tree tappers. 

In dealing with the figures of this account we may 
first put down what are called the miscellaneous perma- 

17 



1 8 TAXATION AND WORK. 

nent receipts. They consist of the sales of public lands, 
consular fees, interest in part recovered, and contributions 
to the sinking fund of the Pacific Railways, incomes from 
trust funds for soldiers' homes, sales of government prop- 
erty, taxes on property in the District of Columbia, 
profits on coinage, and some other small matters; to 
which may be added bank taxes, taxes on oleomargarine, 
and other internal revenue receipts distinct from liquors 
and tobacco ; all of which amounted in the fiscal year 
ending June 30, 1891, 

To $28,392,877 55 

The revenue attributable to liquors and tobacco in the 
same fiscal year was as follows : 

Internal Revenue, spirits $ 83,335,963 64 

Customs Revenue, spirits 3,437. 57i oo 

Customs Revenue, wine 5,229,833 00 

Internal Revenue, beer 28,565,12992 

Customs Revenue, beer 835,922 00 

Internal Revenue, tobacco 32,796,270 97 

Customs Revenue, tobacco 16,172,277 00 

Total revenue from liquors and tobacco $170,372,967 53 

Total with permanent receipts $198,765,845 08 

By reference to the previous statement of expenditures 
in Chapter III., it will be observed that the normal 
expenditures of the government in the same year were 

Cost of government, rivers, harbors, naval vessels, 
Indians, interest on debt, and all other disbursements 
of a recurrent kind except for pensions $201,554,850 50 

The deficiency of revenue from liquors and tobacco and 

permanent sources was only 2,789,005 42 

The miscellaneous permanent receipts have not varied 
greatly for many years. The average revenue from liquor 
and tobacco — 



PRINCIPAL SOURCES OF REVENUE. I9 

From 1871 to 1880, was $112,000,000 00 

From 1881 to 1890, was 142,000,000 00 

In the fiscal year ending June 30, 1889, it was 148,883,778 00 

" " •' 1890, " 163,490,77800 

" " " 1891, " 170,372,96700 

It comes to between $2.60 and $2.70 per head. 

On this basis the revenue from liquors and tobacco for the 

fiscal year ending June 30, 1892, will probably exceed. . $180,000,000 00 
The permanent receipts may be computed at. . , 25,000,000 00 

Total $205,000,000 00 

On the other hand, the interest account has been re- 
duced about $5,000,000, so that if the present Congress 
shall not exceed the appropriations of the last, these 
sources of revenue, liquors, tobacco, and miscellaneous 
permanent revenues, will yield at least $15,000,000 in 
excess of all charges except pensions. This sum will 
more than cover bounties on sugar, if the Supreme Court 
permits such bounties to be paid. 

The revenue from customs after deducting that de- 
rived from liquors and tobacco may therefore be dealt 
with as the source from which pensions are to be paid 

In the fiscal year ending June 30, 1891, the total revenue 

from customs was $220,488,327 05 

Amount returned in rebates and drawbacks 11,937,408 79 

True customs revenue $208,550,918 26 

Already set off against normal expense the customs 

revenue from liquors and tobacco 25,675,603 00 

$182,875,315 26 

Duties removed under last tariff bill : 

Sugar $32,468,339 00 

Some other petty articles, which have been added to the 
free list, make the probable reduction of revenue 
through the remission of taxes 35,000,000 00 

Balance $147,875,31526 



20 TAX A TION AND WORK. 

On the other hand, the customs revenue may be com- 
puted for the fiscal year ending June 30, 1892, upon the 
supposition that the increased revenue now accruing from 
the advance in rates on tin-plates, wool and machinery, 
of which the imports are increasing, will more than offset 
the reduction of revenue due to the advance in rates 
upon other goods. The revenue from customs on other 
articles than liquors and tobacco for the present fiscal 
year may therefore be estimated at $160,000,000, which 
would correspond to the estimate of the Secretary of the 
Treasury. 

Estimate of pensions as given by the Secretary of the 

Treasury $125,000,000 00 

Excess of customs revenue $ 35,000,000 00 

This excess may be applied to additions to the free 
lists, as we are far in advance of the requirements of the 
sinking fund for reduction of debt. 

In dealing with the government account, the simplest 
way IS to pay no regard to what are called the require- 
ments of the sinking-fund act. It provides for nothing 
but a sort of hocus-pocus or juggle in bookkeeping, or in 
the method of keeping the national accounts. As a mat- 
ter of fact the framers of the act never dreamed of the rapid 
payment of our debt ; the liquidation is already far in 
advance of what they wished to secure. 

In dealing with this excess, consideration may be given 
to the classification of dutiable imports with reference to 
their use, and for this purpose we may reverse the cus- 
tomary order, placing the articles which may be rightly 
subject to revenue duties at the head. 

The following table gives the revenue from customs in 
the fiscal year ending June 30, 1891, omitting sugar, sisal, 
and other vegetable fibres, now on the free hst ; also 
omitting liquors and tobacco: 



PRINCIPAL SOURCES OF REVENUE. 21 

Class E — Articles of voluntary use, luxuries, etc., etc $31,386,772 00 

Class D — Manufactured goods, ready for consumption. . . . 74,397,070 00 

$105,783,842 00 

These two classes more than cover the annual pension roll 

computed separately from arrears or first payments.) 
Class C — Materials partly manufactured, which are used in 

domestic industry, including tin-plates $25,139,483 00 

Class B — Articles in a crude condition, commonly called raw 

materials 12,948, 160 00 

Class A — Articles of food and live animals 13,078,035 00 

Fines, Penalties and miscellaneous 3,731,599 23 

Total $160,681,039 23 

Pensions estimated by the Secretary of the Treasury 125,000,000 00 

Excess $ 35,681,039 23 

On the basis of the treasury estimates the excess could be 
appropriated to the abatement of duties on all articles 
of food, omitting fruits and nuts by which remission 

the reduction of revenue would be $9,000,000 00 

All articles in a crude condition could then be added to the 

free list 13,000,000 00 

Abatement of taxes on tin-plates ,,,,,,. 11,000,000 00 

$33,000,000 00 

and yet the excess would not be exhausted. 

I am aware that this estimate of surplus differs in slight 
measure from the computations submitted by the Secre- 
tary of the Treasury. It may be remarked, however, 
that the conservative estimates of prospective revenue 
submitted by the executive officers of the Treasury for 
very many years have almost invariably been exceeded 
and that it is now apparent that even the estimates which 
I have taken in the present computations are already 
certain to be exceeded, even in the present fiscal year. 



CHAPTER V. 

How THE Tariff should be Reformed. 

In the previous chapter it has been computed that the 
present Congress in its second session may rightly deal 
with an excess of revenue above all expenditures of every 
kind, of $35,000,000 or more. 

If in the interval, assurance shall be given that credit will 
no longer be shaken by a prospective debasement of the 
standard of value through the free coinage of silver dollars 
of full legal tender which are now worth after being 
melted less than seventy cents, this surplus income or 
revenue may be much larger. 

It may be remarked that the revenues already received 
the present fiscal year fully warrant the expectation of a 
normal increase on liquors and tobacco, while the customs 
revenue may be largely in excess of the estimates upon 
which the above computations are made. It is almost 
certain, therefore, that the excess of revenue from liquors, 
tobacco, and permanent receipts in the fiscal years ending 
June 30, 1893 and 1894, will suffice to cover any increase 
in pensions above the estimate for the present year. In 
a recent hearing,the Commissioner of Pensions testified 
that pensions would reach the highest point under exist- 
ing laws in the fiscal year ending June 30, 1894, and after 
that would diminish rapidly. 

But it will be borne in mind that with the relief to 
domestic industry from the abatement of duties proposed 

22 



HO IV THE TARIFF SHOULD BE REFORMED. 23 

to the amount of $33,000,000, the duties on manufactured 
goods may also be considerably reduced ; then with the 
ensuing prosperity and the great increase in the export of 
farm products (especially canned fruits and milk promoted 
by free sugar and tin-plates) of which free exports we 
already witness the beginning since sugar, sisal, manilla, 
and some other articles were put in the free list — our 
dutiable imports would be very greatly increased, because 
our general consumption can always be stimulated by a 
reduction in prices. At the same time wages would rise 
with the greater activity in manufactures, agriculture, and 
commerce. 

Under these conditions, substantially all the partly 
manufactured articles which enter into the processes of 
domestic industry could very soon be added to the free 
list. 

The alternative would be, after having put all articles 
of food and all crude materials into the free list, and hav- 
ing reduced the duty on manufactured goods in propor- 
tion to the reduction on materials, then to adjust the 
duties by a reduction by percentage, year by year, until 
we reached an equilibrium of expenditure with the in- 
come derived from liquors, tobacco, and dutiable imports 
of the nature of luxuries or of purely voluntary use. 

Another method of tariff reform might be considered. 
One-half of the specified articles on which duties are now 
imposed, yield so insignificant a revenue, that if put into 
the free list the amount of tax abated would not exceed 
fifteen per cent, of the total revenue. This change would 
greatly promote commerce, and might diminish the cost 
of collecting customs even more than one-half. 

The way to tariff reform is very plain — the will is not 
wanting — what is now needed is concentration upon a 
definite and consistent plan of tariff reduction. 



24 TAXATION AND WORK, 

The preparation of such a measure is a very simple mat« 
ter, provided those who undertake to frame it proceed 
upon the rule that all taxes that the people pay the gov- 
ernment should receive. 
X There have been three attempts to reform the war 
tariff of this country. The present system is intellectually 
dead ; it lives only by a vis inertia and through an unde- 
fined fear of change. The Tariff Commission appointed 
by a Republican administration made one futile attempt. 
The Democratic Congress, which reported the Mills Bill, 
made the second effort. The last Congress brought 
forth a measure known as the McKinley Bill, which is 
the scorn and contempt in its dutiable list, even of a 
majority, or at least of a large minority, of those who 
voted for it. 

The movement of the people is slow but sure. Every 
great reform in this country has passed through the same 
sequence of blind and misdirected effort, until at last 
when the time has arrived the true leaders have taken 
their places, and the reform has been accomplished. 

The will of this people now is that taxation shall be 
reduced ; that revenue measures shall be so framed that 
the government shall receive all the taxes that the people 
pay ; that the civil service shall be maintained on the 
basis of honest and faithful service, without regard to 
\ party politics. 

The Supreme Court of the nation has defined the prin- 
ciple of taxation by which Congress must in the end be 
governed. In Loan Association vs. Topeka, Justice Mil- 
ler established the limits of taxation in terms that admit 
of no evasion (20th Wallace, 655). 

" The power to tax is therefore the strongest, the most 
pervading of all the powers of government, reaching 
directly or indirectly to all classes of the people. This 



HOW THE TARIFF SHOULD BE REFORMED, 25 

power can as readily be employed against one class of 
individuals and in favor of another, so as to ruin one 
class and give unlimited wealth and prosperity to the 
other, if there is no implied limitation of the uses for 
which the powers may be exercised. To lay with one 
hand the power of government on the property of the 
citizen, and with the other to bestow it upon favored in- 
dividuals to aid private enterprises and build up private 
fortunes, is none the less a robbery because it is done 
under the forms of law and is called taxation. This is not 
legislation. It is a decree under legislative forms." 

The huge abundance with which this country is en- 
dowed, coupled with the continental system of absolute 
Free Trade among the several States, over a wider area and 
among a greater number of people than ever enjoyed such 
rights before, has saved us from any disaster like that in 
which the protective system culminated in Great Britain 
in 1840. 

Yet signs are not wanted of a very false distribution of 
products — notwithstanding the rapid accumulation of 
wealth and the undoubted progress which has ensued in 
spite of the obstructions to commerce — great centres of 
poverty are found in our midst and great classes, espe- 
cially in agriculture, are suffering from causes which they 
cannot define, and which in some instances they propose 
to remedy by measures which would be worse than the 
disease. 

The one merit of the McKinley Bill was its free-trade 
part. The placing of sugar, fibres, and some other small 
articles upon the free list has already given an impetus to 
exports, which is but an example of what may follow in 
yet greater measure when a tariff for revenue is enacted 
which shall be so framed that all the taxes that the 
people pay the government will receive. 



CHAPTER VI. 

Taxation Which the Government does not 
Receive. 

In dealing with the proposed remission of taxes on 
crude and partly-manufactured materials, consideration 
must be given to the relative burden of one class of taxes 
as compared to another. 

In twelve years, 1880 to 1891 inclusive, the duties upon 
the imports of articles of luxury or of voluntary use, en- 
tered at a valuation at the port of shipment (disregarding 
fractions in this and the subsequent statements), 

Of. $1,022,000,000 

Have yielded a revenue of $575,000,000 

Articles manufactured ready for consumption, valued at 

$1,578,000,000 

Revenue 791 , 500,000 

Articles of food (about four-fifths sugar and molasses) and 

live animals, valuation $1,430,000,000 

Revenue 725,000,000 

Total revenue $2,091,500,000 

So far, the duties upon these classes may be justified 
under the necessity for a revenue from customs, provided 
they are rightly adjusted. 

It is to be observed that a very considerable part of the 
revenue which is derived from the import of textile fab- 
rics is yielded by articles which are not of prime necessity. 
It is secured from kinds of goods that depend mainly 
upon fashion and fancy rather than upon utility for their 

26 



TAXATION NOT RECEIVED. 27 

sale ; these taxes may, therefore, do no injury to con- 
sumers even if for a time or even permanently continued 
at high rates of duty for revenue only. 

In the same period of twelve years, 1880 to 1891 inclu- 
sive, the dutiable imports of crude materials, which are 
necessary in the process of domestic industry, valued at 
port of shipment, 

At $634,000,000 

Have been taxed. . . , $182,000,000 

Materials partly manufactured which also enter 
into the processes of domestic industry 
valued at $838,000,000 



$1,472,000,000 
Have been taxed 246,000,000 

Total Tax $428,000,000 

This annual tax of about $35,600,000 has been but a 
small part of the excess of revenue which has been ex- 
pended in the rapid payment of our national debt by the 
purchase of bonds before maturity at a high premium. 
This reduction of debt is a benefit, and may be set down 
as so much gain to the people. 

The evils of these taxes are, however, manifold while 
the actual cost of their collection can hardly be measured. 
These evils consist in the following relative disabilities or 
additional charges upon consumers of sums of money 
which the people pay but which the government does 
not receive. 

First. — In the maintenance of the prices of some of the 
most important materials which are consumed in domestic 
arts, year by year, above the prices of the same materials 
in foreign countries, whatever the actual prices of each 
year may be. 

Second. — In depressing the prices of these same materi- 
als in other manufacturing countries by the obstruction to 



28 TAXA TION AND WORK. 

the demand of this country which possesses the greatest 
purchasing power of any nation in the world. 

Third — In diminishing the purchasing power of other 
nations in respect to the excess of our farm products, thus 
reducing the demand upon us and depressing the price of 
our excess which is necessarily sold for export upon which 
the price of our whole crop depends. 

Fourth — In rendering it necessary to grant compensa- 
tory duties on the import of manufactures ready for con- 
sumption, in order to overcome in part the evil done to 
domestic manufacturers by the enhanced cost of their 
materials in consequence of this bad system of duties 
on crude materials. 

Fifth — In the grave injury done to the workmen occu- 
pied in the special production of ores, pig-iron, wool, and 
other crude materials by the uncertainty of their occupa- 
tion, by the import of foreign laborers for special service 
and in many other ways. Any advantages given by such 
duties being as a rule wholly secured by owners rather 
than by workmen. 

It is of course impossible to measure the exact burden 
of the taxes which the people pay but which the govern- 
ment does not receive. The imposition of these taxes 
upon imports in Class B, crude materials, and in Class C, 
partly manufactured materials, vastly increases the burden 
of taxation while yielding a revenue which is insignificant 
in amount. 

From the closest computation which I have been able 
to make, I should estimate it at nearly ten-fold the rev- 
enue derived from the import — or at a sum exceeding 
$326,000,000 each year — which is equivalent to doubling the 
normal cost of the government with the pensions added. 

In justification of this estimate I will give a few ex- 
amples. 



TAXATION NOT RECEIVED. 29 

First. — In respect to the maintenance of the prices of most 
important crude materials above those in other countries. 
Since 1880 there has been a very great reduction in the 
cost of producing iron and steel in this and all other 
countries, accompanied by a very great reduction in 
prices. By a very careful computation made by myself 
and by Mr. David A. Wells, the disparity in the cost of 
pig-iron only, to the consumers of this country as com- 
pared to consumers supplied from other sources in other 
countries, has amounted to $70,ocx),ooo a year. The 
workmen in mines and laborers in furnaces have received 
no benefit from this interference ; their actual earnings 
as a body are barely sufificient to support the life even of 
the imported laborers who constitute the majority of 
their number. There are a few exceptionally high-priced 
men in nearly every establishment. The disparity in the 
price of the higher forms of iron and of steel as compared 
to the lower prices in Great Britain has been much greater 
than on pig-iron. The evil effect of this tax upon coal, 
ores, and crude iron cannot be estimated at less than 
$100,000,000 a year, which is a handicap on all iron and 
steel consumers. 

The effect of duties upon ores, coal, and crude iron 
has been to keep the average price of pig-iron several 
dollars per ton above the price in other countries, varying 
year by year with the urgency of the demand. 

This excess of price has been in some years more than 
the duty in such years — being accompanied by imports in 
such years. In some years the excess of price has been 
less than the duty — then without imports except of some 
special qualities — the general result has been low wages 
to the miners and furnace workmen as a body, and large 
profits to a very limited number of iron masters. In the 
census year just reported, the iron miners of Pennsylvania 



30 TAXATION AND WORK. 

secured intermittent work by which they earned on the 
average $259 each per year for the whole year's work. 

Second. — The effect of the duty upon wool has been very 
different. Wool is produced by very many flock owners 
and in many places throughout the world ; there is no such 
limit of numbers as that which affects iron mining, and no 
limit to a few places. Hence, when the imports of the 
wool of South America and Australia were obstructed by 
the duty imposed in the original wool and woollen tariff 
of 1867, the precise effect followed which was foretold by 
the opponents of that measure. The prices of wool in 
the two great markets of London and Antwerp were 
reduced in the lack of our demand — the manufactures of 
Europe were promoted at the expense of our own — the cost 
of foreign worsted and woollen goods was thereby reduced 
while our manufacturers being deprived of a proper mix- 
ing of wool, were limited to the fabrics to which American 
fleeces are adapted, which are also limited in variety. 
The price of American wool was lowered and yet the 
manufacturer was not protected. Imports of wool, and 
of fabrics at the artificially lowered prices, but at very 
high rates of duty, increased. These conditions, varying 
in different seasons, have continued to the present day. 
Thus the farmer has paid the cost of bad legislation by 
being forced to take a lower price for his wool and also 
to pay a higher price for his clothes. How much this 
double disadvantage costs in money cannot be even 
approximately computed, but it must come to a large 
sum annually. 

The disadvantages under which we exist from the mis- 
direction of our taxes are mainly confined to the two 
classes of duties treated in this chapter, i. e., the taxes 
upon crude and partly manufactured articles. When 
these are removed, the manufactures of this country will 



TAXATION NOT RECEIVED. 3 1 

for the first time in the present generation be enabled to 
measure their own power. 

As I have stated, I cannot compute the true cost of the 
duties which have yielded an annual average of $35,600,- 

000 from taxes upon articles of necessary use at less than 
tenfold, or more than the entire cost of the government, 
including pensions. If any one contests this estimate, 

1 shall be glad to know on what grounds. 

Revenue duties on the other classes of manufactured 
goods, and upon articles of voluntary use as well as 
luxuries, will yield increasing revenues with the greater 
abundance, lower prices, and consequent increase in con- 
sumption. 

This is not a theory, but a matter of observation and 
experience. 



CHAPTER VII. 

British Tariff Reform. 

A VERY common but utterly erroneous idea prevails in 
this country that Great Britain only gave up the system 
technically called Protection when by means of this 
system she had attained conditions of great prosperity 
and a substantially commanding position in manufactures 
and commerce. 

The very reverse is true ; the protective system was 
given up by Great Britain under the pressure of pauper- 
ism and bankruptcy, in which it culminated in the years 
immediately preceding 1842, when Sir Robert Peel pre- 
sented and carried his first great measure for the reform of 
the British tariff. 

The origin of customs in England was in the time of 
Edward I. ; thenceforward, duties were added and multi- 
plied, each rate being devoted to a specific purpose, until in 
1847 ^s many as fifteen separate duties were levied upon 
the same article. In 1787, William Pitt carried through an 
actforconsolldation withoutreducingthenumberof articles 
taxed ; this measure left twelve hundred articles subject to 
duty, and in order to bring the act into force three thou- 
sand resolutions were required in the House of Commons. 
In 1797, however, the laws relating to customs filled six 
large folio volumes, unprovided with an index. The 
great subsequent wars rendered nugatory all Pitt's efforts 
to relieve commerce ; between 1797 and 181 5 — six hundred 

32 



BRITISH TARIPF REFORM. 33 

additional acts were passed, and in fifty-three years of 
the reign of George III. the total number of acts relating 
to imports was thirteen hundred. At length taxes 
became so numerous that nothing was left untaxed ; 
even premiums offered for the suggestion of fresh 
subjects of taxation failed to stimulate invention. 

Another consolidation was begun which required 
twenty-five years for its completion. Then a third was 
undertaken under the direction of Mr. James Deacon 
Hume, and finally a fourth, which was enacted in 1833. 
All, however, worked changes in form rather than in sub- 
stance, except that in 1824, under the lead of Huskisson, 
several of the crude materials necessary to British indus- 
try had been put into the free list, of which the most 
important was wool. This change had worked great 
benefit to both wool grower and manufacturer ; the price 
of domestic w^ool advanced, while the manufacturer was 
enabled to reduce the cost of goods through the oppor- 
tunity given him by freedom from taxation on imported 
wool to buy, sort, and mix his wool in the most effective 
manner. 

The first decisive step in tariff reform was brought 
about in 1840 by the appointment of a Parliamentary 
Committee at the instance of Mr. Joseph Hume. The 
condition of the country was then desperate. The most 
concise account of the case is given in Noble's Fiscal 
Legislation of Great Britain^ but all authorities — Liberal 
and Tory alike — are substantially at an agreement upon 
this point. It is written that " every interest in the 
country was alike depressed — in the manufacturing dis- 
tricts mills and workshops were closed and property daily 
depreciated in value ; in. the seaports, shipping was laid up 
useless in harbor ; agricultural laborers were eking out a 
miserable existence upon starvation wages and parochial 



34 TAX A TION AND WORK, 

relief ; the revenue was insufficient to meet the national 
expenditure ; the country was brought to the verge of 
national and universal bankruptcy. 

*' The protective system which was supported with 
a view to rendering the country independent of 
foreign sources of supply, and thus, it was hoped, foster- 
ing the growth of a home trade, had most effectually 
destroyed that trade, by reducing the entire population 
to beggary, destitution, and want. The masses of the 
population were unable to secure food, and had conse- 
quently nothing to spend upon British manufactures." 

In dealing with the tariff, Hume's committee classified 
imports and the revenue derived therefrom under four 
titles, according to the use to which each subject of taxa- 
tion might be put, and under each title the imports were 
classified again, according to the amount of revenue 
which was derived from each article. This table at once 
disclosed two facts, firsts that a large part of the burden 
of taxation rested either upon necessary articles of food 
or else upon articles which were necessary component 
materials in British industry. Second, that the greatest 
number of specific articles taxed yielded a very small part 
of the revenue — more than half yielding such insignificant 
sums as not to pay the cost of collection. It was the 
logic of this table that led Sir Robert Peel to change his 
convictions in regard to the tariff policy and upon it his 
measures of reform were framed. 

In 1885 the writer ventured to call the attention of 
Hon. Hugh McCuUoch, then Secretary of the Treasury, 
to the bad form of our tariff acts, coupled with a corre- 
sponding bad form in the customary annual statements of 
imports and of the revenue derived therefrom. 

In accordance with the writer's suggestions, the Secre- 
tary gave instructions for the adoption of the existing 



BRITISH TARIFF REFORM, 35 

classification and of the present forms of statement. Sub- 
sequently, under instructions from Secretary Manning, the 
annual accounts from 1880 inclusive were classified under 
the same forms, so that upon a single page of the annual 
report of imports entered for consumption which is issued 
by the Bureau of Statistics of the Treasury Department, 
one may compute at a glance the relative burden of taxa- 
tion upon all classes of imports. 

Some of the conclusions which are developed by the logic 
of these tables have already been given in this treatise. 

At the very time when the protective system culmin- 
ated in the desperate conditions of Great Britain in 1840, 
it will be observed that it was at the end of a period of 
profound peace which had lasted over twenty-five years, 
in which the personal wealth of the upper classes in 
Great Britain had become immense. When presenting 
his first measure of the tariff reform Sir Robert Peel 
remarked, after stating the deficit and the financial dififi- 
culties to be met : " You will bear in mind that this 
is no casual and occasional difificulty. You will bear in 
mind that there are indications among all the upper 
classes of society of increased comfort and enjoyment ; 
of increased prosperity and wealth : and that concurrently 
with these indications there exists a mighty evil which has 
been growing up for the last seven years and which you 
are now called upon to meet." This evil was the increas- 
ing poverty and destitution of the great mass of the 
working people. The remedy was sought in a re-distribu- 
tion of the burden of taxation. The tariff then covered 
1,200 separate subjects of taxation, of which seventeen 
yielded ninety-four per cent, of the revenue; the rest were 
petty obstructions to commerce imposed for the purpose 
of " protection with incidental revenue." That purpose 
was not, however, avowed in these exact terms at that 



3^ TAXA TION AND WORIC. 

time as it has lately been in this country by the advo- 
cates of McKinleyism. 

In the first measure Sir Robert Peel wholly abated or 
reduced the duty upon a consistent plan on 750 articles, 
and also caused an income tax of seven pence in the 
pound to be put upon classified incomes, which is a frac- 
tion less than three per cent.; all incomes below £\^o 
being exempt. From this income tax he anticipated a 
revenue of ;^3, 770,000 in the first year. It yielded 
^5,100,000, conclusively proving that under the previous 
system, while the poor had been rapidly reduced to pau- 
perism, the rich had become richer. 

Like causes produce like effects. Under the pretext of 
protection to the miners of this country, and especially 
Pennsylvania, a duty has long been maintained upon the 
import of foreign iron ores ; it is now seventy-five cents 
a ton, which is precisely equal to the labor cost of produ- 
cing a ton of iron ore in Pennsylvania, — according to the 
sworn statements of the iron masters of Pennsylvania, by 
whom its iron mines are worked. The result of this system 
in the last census year, — a year of the greatest activity 
ever known — was that 4,410 iron miners and workmen 
secured an income of $259 each, amounting in all to 
$1,141,239. There are iron masters in the state of Penn- 
sylvania, whose single incomes in a single year have ex- 
ceeded the whole sum earned by the protected iron miners. 

Where is the leader who will do what Sir Robert Peel 
did for England ? Who is the legislator who will give up 
the errors of a life-time in the face of the logic of such 
facts and lead his political supporters to a conclusion 
which will give him a right to use the same words which 
Sir Robert Peel uttered, when he left office in 1847, after 
having carried the repeal of the Corn Laws ? 

" I shall leave a name sometimes remembered with ex- 



BRITISH TARIFF REFORM. 37 

pressions of good will in the abodes of those whose lot it 
is to labor and to earn their daily bread by the sweat of 
their brow, when they shall recruit their exhausted 
strength with abundant and untaxed food, the sweeter 
because it is no longer leavened by a sense of injustice." 

The effect of the first measure of tariff reform in Great 
Britain — that of 1842 — was not immediately perceptible, 
the evil effect of the previous conditions being very 
deep-seated ; but before 1845 the beneficial influence upon 
every branch of industry, agriculture, manufactures, and 
commerce alike, had become so manifest that little oppo- 
sition was met to Peel's second great act of tariff reform 
of 1845, by which four hundred and thirty articles, con- 
sisting of the crude and partly-manufactured materials 
which entered into the processes of domestic industry 
were put into the free list ; the duties on the lessening 
number of dutiable imports being at the same time 
reduced and adjusted to these new conditions. In 1846 
the Irish famine forced the abatement of all taxes upon 
food by orders in council, subsequently followed by the 
repeal of the Corn Laws. 

In 1847 Sir Robert Peel left office, but the immense 
benefits to every branch of British industry rendered it a 
comparatively easy matter to bring the tariff substantially 
to its present condition in 1853, coupled with a repeal of 
the Navigation Laws under the lead of Mr. Gladstone. 
Since that date the people of the United States have been 
forbidden by their own acts to compete with Great Britain 
in the construction and use of ocean steamships, while the 
commercial flag of Great Britain dominates every sea un- 
der the beneficent influence of freedom from all restrictions, 
and by virtue of the protection which is given by exemp- 
tion from taxation on all the materials used in the construc- 
tion and in the subsistence of the vessels. 



SS TAXATION' AND WORK. 

In the speech of 1842 in which Sir Robert Peel surren- 
dered the conviction of a life-time of active political influ- 
ence when introducing a reform of the whole fiscal system 
of Great Britain, he laid down the principle of which he had 
framed that measure in this memorable declaration : 

" If we had to deal with a new society, in which those infinite and com- 
plicated interests which grow up under institutions like those in the midst of 
which we live, had found no existence, the true abstract principle would be 
* to buy in the cheapest market and to sell in the dearest.* And yet it is quite 
clear that it would be utterly impossible to apply that principle in a state of 
society, such as that in which we live, without a due consideration of the in- 
terests which have grown up under the protection of former laws. 

"While contending for the justice of the abstract principle, we may at 
the same time admit the necessity of applying it partially. I think the 
proper object is first to lay the foundation of good laws, to provide the way 
for gradual improvement which may thus be introduced without giving a 
shock to existing interests. If you do give a shock to those interests, you 
create prejudice against the principles themselves and only aggravate the 
distress. This is the principle on which Ave attempted to proceed in the 
preparation of the tariff." 

This principle was justified by events — the most earnest 
opponents at the beginning became the most urgent sup- 
porters of the reform before its completion, giving Mr. 
Gladstone the reason for saying when reviewing these 
measures : " The road to Free Trade is like the road to vir- 
tue — the first steps the most painful, the last the most 
profitable." (I quote from memory.) 

It would be difficult to state the rule upon which tariff 
reform should be conducted in this country in any plainer 
or simpler terms. 



CHAPTER VIII. 

Beggarly Compensation of United States 
Officials. 

A FEW words may now be rightly given to some of the 
subjects of our national expenditure and some directions 
in which our appropriations should be increased. 

No other country denies to its principal executive 
officers a salary which should be adequate to sustain their 
position with dignity. No man in this country who 
might not well be ashamed of the miserable compensation 
of the judicial officers of the national courts, although the 
salaries of some of the judges of the lower courts were 
slightly raised by the last Congress. No one who gives 
any attention to the matter but would try to devise some 
method for relieving members of Congress from being the 
errand boys of their districts, by giving them at the public 
cost the assistance of such secretaries and stenographers 
as they might require. No business man but would 
advocate such payment to senators as would relieve those 
who have not a fortune from the necessity of practising 
law in the minor courts during the recesses of Congress, 
or from being in part supported by their business or law 
partners while in the public service. 

Finally, no one who has become as well informed as the 
writer in regard to the excellence and thoroughness of the 
work of many of the subordinate officers in the depart- 
ments would deny them a rate of compensation equal to 

39 



40 TAXATION- AND WORK. 

that of a second-class bookkeeper in a merchant's count- 
ing-room. 

A small part of the money annually spent on remote 
improvements which have little true claim, would suffice 
to meet these requirements. The money proposed to be 
given to a few hundred sugar-planters as a bounty would 
cover a suitable increase to the niggardly standard of the 
present compensation of our judges and other public 
officers many times over. 

I think the public has no conception of the meanness 
of the compensation of its principal officers and other 
public servants. I have before me a list of the chief 
officials and their assistants of the United States, num- 
bering sixty-four persons : the Vice-President and eight 
Cabinet officers, $8,000 a year each ; nine Supreme 
Court judges, $10,000 each, with a petty honor arimn 
of $500 in addition to the Chief Justice ; ten Circuit 
Court judges, $6,000 each, $60,000 ; one Solicitor-Gen- 
eral, $7,000 ; the Treasurer of the United States, who 
is responsible for the custody and safe keeping of an 
income of over $1,000,000 a day or more, $6,000; thirty 
men whose entire payment is $235,500 — less than $8,000 
a year each. 

There is not a lawyer capable of filling their place on 
the bench, and there is not an official connected with any 
considerable railroad, bank, insurance company, or other 
similar corporation, who would not be called upon to 
make a very large pecuniary sacrifice if named for any 
one of these places. It would not be difficult to name 
less than ten men, in business life, each of whom is in 
charge of affairs of vastly less importance, measured by 
the mere work to be done than our government officers, 
whose united salaries would exceed the payment of the 
thirty principal officers of the United States, omitting the 



BEGGARLY COMPENSATION^ OF U, S. OFFICIALS. 4 1 

President. I think I could name six men whose salaries 
exceed the thirty designated officials. 

Passing to the grade below, we find Assistant Secretaries, 
the Comptroller of the Currency and his assistant, the 
Auditors of the Treasury, the Registrar, the Cashier, and 
other men holding offices of the utmost importance in the 
conduct of the vast affairs of the United States, number- 
ing thirty-four, whose aggregate salaries come to $144,800 
— a trifle over $4,000 each ; each one less than the salary of 
a first-class bookkeeper in any great bank, insurance com- 
pany, or commercial establishment. It is difficult to 
express the sense of the utter unfitness and unsuitability 
of these payments. 

The total payment of the sixty-four chief officials of 
the United States and their principal assistants is 
$381,300. 

The salaries of the subordinates in the many depart- 
ments of this government are in their wretched proportion 
corresponding to these payments made to the principal 
officers. 

To one who knows anything— fo any one who has even 
a very slight knowledge of the enormous volume of care- 
ful accounting and of thorough work which of necessity 
must be done in the conduct of the service of this nation, 
the only wonder is that without any true order of merit 
in the Civil Service, without any assurance of a tenure of 
office during efficient and honest service, and without any 
suitable provision for old age, men can be found who 
will bury themselves in these departments and do the 
work of which every merchant can have some conception 
when reading the condensed statement or account current 
of the United States with the Tax Payers which has been 
given in this treatise. It would be well if every one who 
holds any responsible position in business life would 



42 TAXATION AND WORK, 

give attention to this matter and picture for himself the 
amount of Vv^ork which must have been done in order to 
enable the writer to condense a complete analysis of the 
affairs of a nation so as to give it in a single column of a 
newspaper or on two pages of a magazine. (See Forum, 
Sept., 1 89 1.) The reform in the Civil Service will not be 
fully accomplished until this wrong is righted by making 
an appropriation for the increased compensation of the 
judicial and executive officers of this government. 

Avery small part of the annual increase in the revenue 
derived from liquors and tobacco only would suffice for 
the purpose. 

Having thus dealt with the present burden of taxation 
in this country, we may rightly consider some of the 
elements of comparative taxation which will indicate the 
transcendent position that we may assume when our own 
taxes are rightly adjusted. 

We should never lose sight of the fact that our conti- 
nental system of Free Trade among the several States of 
the Union saves us from the necessity of any army except 
for service as a border police. If our army were equal in 
magnitude to the average of the armies of the European 
States at the present time, the number of men in the 
prime of life who would be taken from productive work 
would be somewhere between six hundred and eight 
hundred thousand. Each one of these worse than idle 
men would consume the product of about one other per- 
son, while the time taken for camp duty and drill by 
men in the reserves would again deplete the product. 
Therefore our relative burden, measured in terms of 
work, is not over one-third that of European countries. 
Where it now requires the year's work of about eight 
hundred thousand men to support our government, in- 
cluding our small army and navy as they now are, if we 



BEGGARLY COMPENSATION OF U. S. OFFICIALS. 43 

kept up an armed force equal in proportion to the men 
in active service in the armies and navies of Europe, it 
would require six to eight hundred thousand soldiers 
in addition ; and as it requires about one other man's 
product at the meagre result per man in most European 
countries to support one soldier, that would add six to 
eight hundred thousand more. The mere measure in 
money of the war tax of about one thousand million dol- 
lars which is now impoverishing Europe is but a slight 
indication of the true burden of the passive war which 
is miscalled peace. The actual European war tax, when 
computed in terms of Avork, is the correlative of thrice 
the whole work which we now devote to the entire sup- 
port of our government, including pensions. 

There are twenty-three million people occupied for 
gain in this country at the present time — men, women, 
and young persons, of whom perhaps eighteen million 
are men, many of them beyond arms-bearing age. The 
proportion of men in this country of arms-bearing age at 
the present time does not exceed fourteen million, of 
whom only about thirty thousand are taken away from 
productive work for occupation in the army or in the 
navy. Let it be assumed that our armed forces were 
increased to seven hundred thousand in active service in 
preparation for war and seven hundred thousand more 
supporting this force ; that would come to ten per cent. 
of the workmen of the country who are of arms-bearing 
age, and would then become only equal to the European 
war tax. 

Even this country could hardly bear such a strain. 
What must be the necessary effect of such a burden upon 
countries like Germany, Austria, and Italy, where the 
capacity or the productive energy of soil and labor com- 
bined under present conditions, is not one-half that of 



44 TAXATION AND WORK. 

this country, with corresponding wages at one-third to 
two-thirds our rates? No wonder that the people in 
many parts of Germany are almost unfit to work, and are 
incapable of the maximum of production ; no wonder 
that a loathsome disease called thQ pellagra, which is due 
to insufficient food, has devastated some parts of Italy, — 
the price that poor Italy pays for freedom from despot- 
ism ! No wonder that Russia is famine-stricken. 

But light is breaking : witness the recent treaty of reci- 
procity in trade between Austria and Italy — hereditary 
enemies, — Germany, Switzerland, Belgium, and other 
countries, through which treaty for mutual service perhaps 
a considerable portion of their forces may be disarmed. 

One who can read what is written between the lines of 
these figures which relate to armies may comprehend the 
advantage which this country might have over other 
countries, if we do not pervert our system of taxation so 
as to diminish our great advantage in productive power. 

Light as our burden of taxation relatively is, it is so 
badly adjusted that its burden is much greater than can 
be indicated either by a statement in dollars or in days* 
work. 

What one can readily see in the figures and the facts 
may, however, disclose what one does not see so plainly. 



CHAPTER IX. 
What Is Protection? 

" What is Protection ? " " In what does the true 
Protection to Domestic Industry consist ? " This ques- 
tion may have a strange sound ; yet there never was a 
time in the history of this country when a definite answer 
was more needed, the confusion among the advocates of 
the poHcy which has been heretofore known as that of 
" Protection to Domestic Industry *' being now greater 
than among any other class of people. The system for- 
merly called Protection varies very much from the policy 
which is now advocated under that name, which should 
rather be called McKinleyism. 

In dealing with this subject certain propositions may 
serve as a true guide. 

FirsL In selecting the subjects upon which duties are 
to be placed in framing a tariff bill, such discrimination 
should be used as will most fully protect American labor 
from injury. 

Second, In the preparation of measures for collecting 
duties upon imports, such discrimination should be used 
as will most fully promote domestic manufactures, mining, 
and mechanic arts. 

Third. In framing measures for collecting duties on im- 
ports, such discrimination should be used as will most readily 
and fully develop a home market for domestic products to 
the utmost either for export or for home consumption. 

45 



4^ TAXATION AND WORK. 

Fourth. It is not expedient or even lawful to impose 
duties upon imports without such discrimination in the 
choice of the subjects of taxation as may conduce most 
fully to the public interest. 

Fifth. In devising a just method of framing a tariff, if 
any separation can be made in respect to the relations of 
capital and of labor, the interest of the workmen should 
be first considered. 

Sixth. The public revenues derived from taxation either 
by way of an excise on domestic liquors and tobacco or 
by way of duties on imports should be strictly limited to 
the necessary expenses of the government when economi- 
cally administered. 

Seventh. An excess of revenue which cannot be imme- 
diately applied to the payment of debt is a constant 
source of danger and is likely to promote either a waste 
or misapplication of the money derived by taxation from 
the hardly earned products of the people. 

Eighth. All taxes that the people pay, the government 
should receive, and no money sJwuld be diverted from 
public use to purposes of private gain either directly or 
indirectly. 

Ninth. It is neither just nor expedient to frame a tariff 
for the purpose of raising or maintaining the price of any 
given article of domestic manufacture above'what it would 
otherwise be, since that purpose can only be accomplished 
for the benefit of the few at the cost of the many. 

Tenth. It is neither just nor expedient to put a tax or 
duty upon any crude or partly manufactured product that 
is of foreign origin but which is necessary in the processes 
of domestic industry, since such a tax will burden and 
obstruct the work of very large numbers of persons even 
if the private interest of a lesser number may be for a 
time promoted. 



WHAT IS PROTECTION ? 47 

The former policy which preceded McKinleyism has 
been justified by its advocates by imputing its origin in 
this country to Alexander Hamilton. It is true that 
Hamilton called attention to the incidental stimulus 
which might be given to some branches of domestic 
manufacture already existing, through the imposition of 
a tariff imposed for the main purpose of collecting revenue 
from duties upon a few finished articles commonly called 
manufactures ; but this was the incident of Hamilton's 
revenue tariff and not the main object. Hamilton's tariff 
was limited to a small number of taxed articles ; the average 
rate upon dutiable imports was less than ten per cent. * 
Crude materials were left substantially untaxed. A few 
minor changes had been made in Hamilton's tariff down 
to the embargo which preceded the war of 1812. That 
war and the previous embargo changed the conditions 
materially, giving a very unwholesome stimulus to cer- 
tain branches of industry at the cost of many others ; those 
over-stimulated branches clamored to be upheld and 
sustained by increasing duties.^ 

A short time after the war of 18 12 the first formidable 
and influential movement towards raising the duties for the 
direct promotion of certain specific branches of industry 
was mooted. The discussion took a very wide scope ; the 
change was resisted, especially in New England, under the 
popular cry of " Free Trade and Sailors' Rights." In 
1820, Daniel Webster made one of the greatest speeches 
which he ever uttered, at a meeting in Faneuil Hall, which 
was called by the merchants of Boston to oppose these 
measures. Abbott Lawrence and Nathan Appleton, who 

^ In Hamilton's tariffs of 1789 and 1792, spirits, wines, spices, tea, coffee, 
and a few other articles were subjected to duties purely for revenue which 
were above the ad-valorem rates on manufactures. The protective duties 
were all ad-valorem^ and did not average ten per cent. 



48 TAXATION AND WORK, 

afterward became the most conspicuous champions of the 
high-tariff policy, were among the prominent men present 
and taking an active part in this meeting. In 1 824, Webster 
opposed the protective poHcy in the Senate in debate with 
Henry Clay, who had attempted to give it the name of 
" The American System." Webster pointed out that it was 
not an American system at all, but that it was a system 
which had been long in force in foreign countries, notably 
in Great Britain. He called attention to the fact that the 
United States were proposing to take this system up at 
the very time when its adverse influence on Great Britain 
had become apparent and when measures were pending 
under the lead of Huskisson for a change in the policy. 
But the advocates of a high tariff in the United States 
had their way, passing various acts culminating in the 
tariff of 1842, which was enacted in the United States 
in the very year that the great reform of the tariff in 
England was instituted under the leadership of Sir 
Robert Peel in the direction of what has since been 
c^l^.ed British Free Trade. 

It is to be remarked that the lowest prices of cotton 
ever known were reached between 1842 and 1846, during 
th^ imposition of this high tariff; the lowest prices since 
that date are now prevailing under the McKinley act. 
Yet there are 1,000,000,000 non-machine-using people 
in the world who are craving for more and better cotton 
fabrics ; but they can only pay for them in wool, dye- 
woods, ores, or other similar crude materials, which we 
tax in order to keep them out. 

Either one of the tariffs of Hamilton and those enacted 
subsequently, including even the tariff of 1842, would now 
be denounced by the supporters of McKinleyism as 
pestilent efforts of the enemies of domestic industry to 
estabhsh British Free Trade. 



WHAT IS PROTECTION r 49 

Webster afterward sustained the policy which was 
forced upon the country in 1824, but he never attempted 
to refute his own arguments on which he had opposed its 
introduction. In his latter years he merely claimed that 
the government was bound to sustain those branches of 
industry which had been stimulated by the tariff, since it 
had elected at the outset to turn the power of taxation 
against the mechanic arts, agriculture, and commerce, in 
which his constituents had been previously engaged, and 
had encouraged them to establish tlje factory system, of 
which hl^ecame later a mere advocate. 

The only ground on which any of these measures, prior 
to the tariff of 1 861, were supported was this, that the full 
occupation, the quick demand for labor, and high rate of 
wages which prevailed in this country, not only in agri- 
culture and in the mechanic arts, but also in all the 
branches of domestic manufacture which cannot be con- 
ducted in any other country, for the supply of this country 
(constituting by far the greater part of our distinctive 
manufacturing arts) had rendered the special development 
of the iron industry and of the textile manufacture some- 
what difficult and uncertain. 

It is singular to observe how the special representatives 
of pig-iron, wool, and silver have gradually assumed the 
control and direction of the legislation of this country. If 
regard be given to their relative importance, the comparison 
may be made in more than one way ; perhaps the surest way 
is to compare them with the products of the barn-yard. 

Pig-iron in 1890 perhaps reached a total value at the furnace 

of about $130,000,000 

Wool, about , 60,000,000 

Silver, nominally $70,000,000, in fact, about 50,000,000 

Total $240,000,000 

Poultry and eggs, at the lowest computation, maybe put at. . $250,000,000 

4 



50 TAXATION AND WORK. 

The eggs only, at the standard of consumption in the 
factory boarding-houses of Massachusetts and of the iron 
and steel workers of Pennsylvania, came to between 
$125,000,000 and $150,000,000. According to assessors' 
returns in Ohio the ^^g product is worth more than the 
wool of Ohio. 

The production of pig-iron, wool, and silver is relatively 
an insignificant factor in our body politic ; it is their 
abundant consumption that is important. Iron and silver 
give occupation to a very small fraction of the popula- 
tion, who are occupied in mining at very lo# rates of 
wages and under very adverse conditions of life, the 
benefit, if any, accruing almost wholly to the owners of 
the capital which is invested in the mines. 

The proceeds of the sales of poultry and eggs, on the 
other hand, are distributed throughout the country ; very 
little goes to capital, the payments being made almost 
wholly to those who require it more than any other class, 
because they possess so little capital. 

REVERTING TO HISTORIC PARALLELS. 

In 1824 the effort was still being made in Europe as it 
had long been in Great Britain to prevent the distribution 
of information and the knowledge of inventions in manu- 
facturing. It had been a penal offence in the early part 
of the century, prior to 1824, and even I believe up to 
1842, to take drawings or examples of many kinds of ma- 
chinery out of Great Britain. True, the iron industry and 
the textile manufacture already existed in this country in 
very considerable development and, as Hamilton in 1791 
and Webster in 1820 proved, on a very solid basis, having 
become established as infant manufactures during the 
colonial period in spite of the efforts of Great Britain to 
suppress them ; but it was held that they required a cer- 



WHAT IS PROTECTION ? $1 

tain so-called *' reasonable measure of Protection " by way 
of duties on foreign imports of fabrics of like kinds, in 
order to offset the lower wages which prevailed in other 
countries ; it being then erroneously assumed that the 
cost of labor per unit of product might be measured or 
established by reference to the rates of wages. That error 
in regard to the relation of rates of wages to the cost of 
labor still prevails. 

There has been much discussion about promoting 
diversity of occupation or employment under a protective 
tariff. A very slight investigation proves that the effect 
of a protective tariff, so far as it is operative, has been 
rather to restrict than to promote diversity of employ- 
ment. 

All the more conspicuous and important arts in whose 
behalf it has been mainly advocated were well established 
in the United States long before Hamilton's tariff, even in 
the colonies before the Revolution. The cotton industry 
came later, even before the invention of the cotton gin in 
this country, an invention which would naturally have led 
to the establishment of spinning and weaving here whether 
there had been any Protection or not. Hamilton himself 
advocated a remission of the duty of three cents a pound 
upon cotton in 1791, in order to promote the more rapid 
development of the cotton manufacture in this country 
where it was already established. 

No art of any conspicuous importance, requiring skill, 
aptitude, and intelligence in their application to machinery, 
has yet been established in this country merely as a result 
of the adoption of a high tariff. It is possible that there 
are some minor branches of industry of which the corre- 
sponding import has been cut off by almost prohibitive 
duties which may have been brought here in consequence ; 
but no distinct branch of manufacturing of any relative 



52 TAXATION AND WORK. 

or considerable importance has ever been added to the 
occupations before existing here, under any tariff impos- 
ing high rates of duty. 

There is a natural diversity of occupation which estab- 
lishes itself. Its course may be traced throughout this 
country itself, in which we have the widest application of 
absolute Free Trade among the largest number of persons 
who were ever permitted to enjoy the privilege. It will 
be observed that the more free the conditions, the more 
fully each section adapts itself to its own work ; but 
nevertheless in every State there exists a certain ratio of 
occupations, more manufacturing in the East, more agri- 
culture in the West and South. 



CHAPTER X. 

Occupations that cannot be Protected by Duties 
ON Imports. 

The occupations of the people of this country were 
listed in the United States census of 1880 under four 
general titles : 

I j/ — Professional and Personal Service » 

Males 2,712,943 

Females. . , , , .,.,,,., 1,361,295 

4,074,238 

2d— Trade and Transportation. 

Males 1,750,892 

Females 59,364 

1,810,256 

3^ — Agriculture. 

Males 7,075,983 

Females 594,510 

7,670,493 

C^th — Manufacturing — Mechanic Arts and Mining. 

Males 3,205,124 

Females , , 631,988 

3,837,112 

Total c. . . . 17,392,099 

This was the force occupied for gain, from whose work 
the product of the support of a population of 50,155,783 
was derived in the census year covered by the census of 
1880. 

A very slight consideration of the relative numbers in 
each class of occupations of the people of the different 
sections of this country will show that diversity estab- 
lishes itself in the surest manner, the more free the 

53 



54 TAXATION AND WORIC. 

conditions of exchange. The very rapid growth of manu- 
factures and mining in the Southern States since the 
protective system of slavery was removed, gives the most 
conclusive proof that all the manufacturing, mining, and 
mechanic arts develop and grow under a system of free 
exchange, according to the natural conditions and diversi- 
ties of each part of the country, and that the less the 
artificial stimulus given to them the more sure and safe 
their foundations may be. 

It has gradually become apparent, with the development 
of science and invention, that the rate of wages is not a 
sure standard of the cost of labor. It is found that rates 
of wages may be very low, yet the cost of labor in the 
unit of product may be very high ; while conversely it is 
in fact an established rule that in countries of great pro- 
ductive capacity where machinery has been applied in 
largest measure, as it has been in the United States, the 
general rates of wages which are derived from the sale of 
our products are very high, while the general cost of our 
production in each unit of product is very low. This 
rule applies to every art for which the conditions are 
most favorable, and which is not a mere handicraft. 
It is not yet a universal rule because its application 
has been altered by the long continuance of a high 
tariff, the effect of which has been to depress prices 
and wages in some arts in foreign countries by obstruct- 
ing the demand of this country which has the greatest 
consuming power of any one in the world, — while to 
some extent making wages variable and uncertain with- 
out permanently raising them in this country in the arts 
of like kind. It is therefore impossible to adjust duties 
on imports by rates of wages, on the theory that by so 
doing the cost of labor may be equalized. In nine-tenths 
of our work our cost of labor is the lowest in the world as 



OCCUPATIONS THAT CANNOT BE PROTECTED. 55 

our rates of wages are about the highest, therefore the 
last thing we should seek is to equalize the rates of wages. 
We must maintain our high rates of wages in order to 
secure our low cost of labor, so that under Free Trade while 
all nations profit, yet we m.ay rightly profit most on the 
exchange of products and services. 

In respect to Professional and Personal Service and to 
Trade and Transportation there can, of course, be no 
foreign competition and therefore no need of tariff Pro- 
tection, unless the logic of that system may be held to 
require an import duty upon immigrants. 

In the products of Agriculture this country so far 
excels all others in its huge abundance produced at 
high relative wages and low relative cost, that since 
sugar was put upon free list the articles which could be 
imported from a foreign country that are also produced 
by ourselves would represent less than three per cent, of 
our total product. 

Lastly, in dealing with the Manufactures, Mechanic 
Arts, and Mining industries, in which 3,837,112 persons 
were occupied in 1880, it is difficult to set apart in a dis- 
criminating list over 1,000,000 whose product is such that 
one of like kind could be imported even if there were no 
duty upon imports. 

To what extent our finished manufactures would be 
subject to foreign competition cannot be fully determined 
until the component materials which are of foreign origin 
are as free from taxation as those of our competitors in 
Great Britain, Belgium, Germany, and France. 

If we apply this method of discrimination, for instance, 
to the State of Pennsylvania, we may remark that tobacco 
and wool are the only products of agriculture which could 
be imported, giving occupation to a small part of a force 
which numbered 



5^ TAXATION AND WORK, 

In 1880, in Agriculture 301,112 

In Professional and Personal Service, free of foreign competition. 446,713 

In Trade and Transportation 179,963 

In Manufactures, Mechanics, and Mining, the number of bakers, 
blacksmiths, brick and stone masons, butchers, cabinet 
makers, carriage builders, coopers, lumbermen, painters, 
plumbers, wheelwrights, and all others of like kind who can- 
not be sulDJect to foreign competition was , 357,584 

Total exempt from foreign competition 1,285,372 

Subject in part to foreign competition: 

The total number occupied in textile factories — mines, iron and 
steel works, paper mills and the like that are subject to for- 
eign competition, or of whose product a part might be im- 
ported, numbered 170,693 

Total number occupied for gain in Pennsylvania in 1880 1,456,365 

Thus it appears that, even in Pennsylvania, less than 
twelve per cent, of the people who did the work could, in 
1880, be subjected in part to an import of a product of 
like kind. How can we protect the eighty-eight per 
cent. ? 

If the same method of analysis be applied to the occu- 
pations of the people of Ohio, of whom 

40 per cent, were occupied in Agriculture. 

25 per cent, in Professional and Personal service. 

10^ per cent, in Trade and Transportation. 

24^ per cent, in Manufactures, Mechanic Arts, and Mining. 

100 

(the divisions in Ohio very closely corresponding to the 
average of the whole country), we find that even in- 
cluding wool, iron, and every other branch of industry 
subject to a possible import, yet out of 994,475 who 
were occupied for gain, it is impossible to set apart 
50,000 who could under any conceivable circumstances 
or conditions be subjected to an import of a product of 
like kind from any other country, setting aside Canada — ■ 
the sales of the products of agriculture to Canada being 
greater than the purchases. 



CHAPTER XL 

Method of Tariff Reform. 

In dealing with the remedy for the evils of taxation 
under which we now suffer and which inflict privation un- 
der the pretext of Protection I shall be obliged to recur to 
some of the views which have been presented in earlier 
numbers and to repeat in some slight measure some of my 
previous statements. 

Thus far the people of this country have been able to 
bear the vagaries of a system of taxation imposed under 
acts which have been devised without order, method, or 
any really scientific consideration of any definite policy of 
any kind. The tariff has of late been treated as the mere 
football of politics : the McKinley bill supported as a party 
measure by those who considered its provisions wholly 
unfit to be adopted, without any just consideration of the 
true interests of consumers. In spite of these constant 
variations and uncertainties, such have been the effects of 
science and invention appHed in the field, the forest, and 
the factory that the progress of this country in material 
welfare during the last twenty-five years has been greater 
than anything ever known here or elsewhere. 

Viewed from a scientific standpoint, however, the very 
ability of this country to bear the perversion of taxation 
has been almost a misfortune. But the end has come. 
The people have long listened with patience to every shal- 
low and sophistical argument that could be put before 
them, without giving time or attention to the matter, but 

57 



58 TAXATION AND WORK, 

the necessary end has at length been reached in a very sin- 
gular way, to wit : through the very excess of our abundance. 
We are now " smothered in our own grease "; we are bur- 
dened with our own excess of products as compared to our 
own consumption. Under these conditions people have at 
last become tired, and in the vernacular they are now crying 
out : " Give us a rest." From every side and from every 
department of industry comes up the word : '' We have 
asked you for bread, and you have given us a stone. 
You promised us greater activity ; we are subject to de- 
pression. You held out the expectation of better prices 
for our farm products, especially for our wool and our cot- 
ton, and you have brought about conditions in which we 
are being forced to take less for many products that we 
have to sell and to pay more for much that we have to 
buy. We will not submit to these quack methods of legis- 
lation any longer. Only a partial famine in Europe 
has for the time saved us." 

This change in public opinion is coming about without 
any distinct process of reasoning, but rather through a 
gradual development of common-sense and conviction on 
the part of the great mass of the people that a paternal 
policy may no longer be tolerated, of which the logical 
outcome is the perversion of public taxation to private 
benefit, accompanied by a corresponding organization of 
labor with the declared purpose of defending itself against 
capital, as if capital were its enemy. Another outcome 
of this " paternalism " has been the demand of the Farm- 
ers* Alliance for the aid and support of the government in 
speculating in grain and cotton by the lending of fiat 
money at two per cent, per annum. 

These fallacies, of course, affect and mislead only a small 
fraction of discontented persons. The solid common-sense 
of the people pronounces them to be fallacious, and by 



METHOD OF TARIFF REFORM. 59 

instinct rather than reason traces these fallacies to their 
source in the undertaking of Congress to regulate prices 
and wages and to control enterprises by constant inter- 
ference with the freely chosen pursuits of the people. 

The McKinley tariff, so-called, is being rapidly con- 
demned, not because the evils which are affecting the 
community can be directly traced to its provisions, but 
because of an utter distrust of the whole method on which 
it has been framed, which distrust has been derived from 
its general effect. With this change of opinion in regard 
to the measure itself has also come a conclusion in regard 
to the leaders who sustained it, whose sincerity is only 
justified in inverse proportion to the estimate put upon 
their intellectual capacity. This statement is not made in 
a controversial way. Is it not a fact that such is the aspect 
to which the slow, sure, but solid common-sense of the 
mass of the people has been brought ? Is not this a true 
view of the present status ? 

If such is the fact, then there may now be very great 
danger of injudicious methods in changing the policy of 
the country. Unless a plain and intelligent direction can 
be given to the reform of our revenue system by the concur- 
rent action of reasonable men without distinction of par- 
ties, the reform may be worked by methods which may 
cause injury in proportion to the want of intelligence with 
which the new measures are framed, and for lack of right 
discrimination and true protection to our own people. 

I have already stated that it would be as injudicious to 
destroy capital and to break up branches of industry which 
have been almost forced by a high tariff to take the direc- 
tion in which they are found, as it was in the beginning 
to force them into such artificial conditions. In order that 
the necessary changes in taxation may be rightly directed, 
two measures will have become a positive necessity ; first, 



6o TAXATION AND WORk, 

a careful estimate of the annual expenditure for pensions, 
of the duration of that obligation, and of its progressive 
reduction until the Last dollar shall have been paid ; second, 
a judicious selection of subjects of taxation by well devised 
measures, which shall be computed so as to meet this ob- 
ligation without yielding any undue excess of revenue. 
That will be the most difficult part of the undertaking, 
and this work ought to be entered upon without regard to 
party politics. 



CHAPTER XII. 
Protection by Exemption from Taxation. 

All advocates of Protection through duties upon im- 
ports down to the advent of McKinleyism have supported 
that system as a temporary policy in preparation for Free 
Trade. 

The only distinction between the intelligent members 
of the Republican and Democratic parties is now in respect 
to the time and method of beginning a reform of the 
tariff. 

In beginning to deal with these measures, attention may 
well be given to two other fundamental propositions pre- 
viously submitted : First, in view of the fact that measures 
of taxation may interfere greatly with the progress of 
industry, such discrimination should be used in framing 
these measures as will most effectually promote domestic in- 
dustry in all its branches. Second^ since the protection of 
American labor is bound by indissoluble ties to the protection 
of domestic industry ^ every measure of taxation should be 
so framed as to protect the American workman in the most 
effective 7nanner. 

Dealing with the matter from this point of view, all 
taxes upon necessary articles of food must, of course, be 
done away with because food is the most essential element 
of human power ; fuel may be included in almost the same 
category. 

It is manifest that no tax can be imposed upon the im- 
port of food without increasing the cost of that food to 

6i 



62 TAXATION AND WORIC. 

the consumer. Such taxes inflict privation under the 
senriblance of protection. The tax may happen to be a 
very necessary article of food. We may take potatoes as 
an example, as they are now subject to a tax on imports 
of twenty-five cents per bushel. Potatoes are only im- 
ported for common use in years of scarcity and of short 
crops in this country. In other years the import consists 
merely in the early spring luxuries from Bermuda and 
elsewhere. When there is a short crop in New England, 
New York, and along the sea-coast, the prices of necessity 
rise to a very high point, because potatoes will not bear a 
very long haul by railway. Then the tax oppresses the 
poorest in the community in greatest measure. It is then 
that this tax becomes malignant. It adds nothing to the 
income of the farmer, while it oppresses the poor. In one 
year, not long since, this tax added a million and a quarter 
dollars to the unnecessary surplus revenue of the people 
of the United States and this burden fell mainly upon 
the poorer classes in the northeastern part of the country. 

The same reasoning applies to every kind of food which 
is of necessary use. Sugar has lately been added to the 
free list. This will be to the great advantage of con- 
sumers, and when hereafter the tax is taken from tin-plates 
this abatement of the tax on sugar will also become of 
great advantage to the farmers and canners of fruit, of 
preserved milk, and other agricultural products, in which 
sugar and tin-plates are the component materials of chief 
cost. 

By the same rule any tax which is imposed on the crude 
or partly manufactured materials of foreign origin which 
are necessary in the processes of our domestic industry, 
becomes a most serious obstruction to the development 
of domestic industry and indirectly a most serious obstruc- 
tion to the progress of the farmer. It burdens the 



PROTECTION- B Y EXE MP TIOISF FROM TAX A TION. 63 

domestic manufacturer, restricting his power of purchase, 
while it cuts off the farmer from one of his principal out- 
lets for the excess of his crops by export. Such a tax very 
often works to the greatest injury of the producers of the 
specific crude material which it had been intended to 
benefit. We may again take domestic wool as an example 
of such grave injury. When it was first proposed to adopt 
the so-called "wool and woollen tariff," of which the present 
measure is but an aggravated continuation, the most skil- 
ful and competent of the woollen manufacturers under the 
lead of the late Edward Harris, of Woonsocket, presented 
arguments to the Committee of Ways and Means against 
the duty on wool, upon the distinct ground that such a 
tax, while it would seriously injure the domestic manufac- 
tures of woollen or worsted goods, making it necessary to 
advance the cost of the fabric and also the price of cloth- 
ing, would also depress the price of domestic wool, gravely 
injuring the farmer. Such has been its exact effect. 
What was predicted twenty-five years ago has been verified 
to the letter. 

This subject has been dealt with many times, and as 
often as the prices of wool have been set off against the 
varying rates of the tariffs since that of 1824, in which 
wool was first made subject to duty, it has been made very 
plain that while the prices of wool have varied from other 
causes, yet so far as the tariff appears to have had any 
effect at all, the high tariffs after one or two years of ad- 
justment have caused domestic wool to become very much 
lower in price ; while on theother hand, within a year or two 
after low tariffs had been enacted the prices of domestic 
wool have always advanced. These changes have been 
fully explained both by the advocates of protection to the 
woollen manufacture and by the advocates of freer trade. 
In order that the manufacture of woollen and worsted 



64 TAXATION AND WORK. 

goods may prosper, manufacturers must have the same 
free access to all the varieties of wool in the world as that 
enjoyed by their competitors, especially the manufacturers 
of Great Britain. Otherwise the whole balance of the 
industry is broken up. 

When duties are high an undue proportion of woollen 
machinery is put upon the few varieties of fabric that can 
be wholly made of domestic wool. This branch of work 
is soon overdone, the price of the fabric goes down and 
the price of domestic wool goes with it. On the other 
hand, the representatives of other branches of the woollen 
industry which are obstructed by the duties on foreign 
wool are obliged to advance the prices of their goods in 
order to cover the additional cost ; clothing as a whole 
costs more, while the farmer gets less for his wool than he 
ever did before. The same process of reasoning, varied 
according to the conditions in each case, can be applied 
to all other crude materials. 

In respect to partly manufactured materials such as 
sheet and rolled iron, iron bars, tin-plates, and the like, it 
will be observed that while through invention and dis- 
covery there has been a very steady and consecutive 
reduction in the cost and thereafter in the price, these 
inventions have been of equal effect in other countries, 
and the prices of metal in other countries, especially in 
Great Britain, have been reduced in even greater measure 
than they have in this country. The effect of this has 
already been stated. Dealing with pig-iron only, we find 
that the price of this crude material, of which we are the 
largest consumers in the world, for ten years, to our ship- 
builders, machinists, railway constructors, manufacturers 
of agricultural tools, and all other artisans who work in 
metal, has been on the average $70,000,000 a year more 
than the price of the same quantity and the same quality 



PROTECTION BY EXEMPTION' FROM TAX A TION, 65 

delivered in Great Britain to the artisans and machinists 
in her own works and in those of other countries. We 
have paid in ten years $7CX),ooo,ooo in the additional cost 
of pig-iron, and yet the incompetent among the pig-iron 
men still cry for higher protection. 

Again, taking as example the single article of tin-plates : 
The competition in Wales has steadily reduced the cost of 
this important material, of which we are also the greatest 
consumers in the world. The tax which has been paid 
by the consumers of tin-plates in this country for the last 
ten years up to 1891 inclusive has amounted to over 
$60,000,000. With singular fatuity the advocates of 
McKinleyism are now endeavoring to promote the transfer 
of the production of tin-plates from Wales to this country 
by so advancing the prices as to enable persons who have 
not heretofore proved themselves to be competent, to 
undertake this somewhat objectionable branch of industry 
at the cost of the consumers of this country. This art is 
in many respects a very loathsome and undesirable branch 
of industry, for which there is now no supply of laborers 
in this country. All the work, except the mere rolling of 
the plates of iron or steel, is done under such offensive 
conditions as to make it one of the kinds of work about 
which Daniel Webster long since said that *'we cannot 
afford to do for ourselves what foreign paupers can do so 
well for us." The people who do this work in Wales are 
not paupers, — they are fairly well paid, but the conditions 
of the work are such that those who do it might become 
a very undesirable element in our population. Until the 
offensive and unw^holesome parts of the work of dipping 
plates of metal into oil and acid and then in melted tin 
are removed by invention, it is the greatest folly to at- 
tempt to transfer this branch of work from any other 
country to this country. Moreover this change w^ould 



66 TAXATION- AND WORK, 

cut off from Great Britain her present means of paying 
to the extent of about $30,000,000 a year, which is now 
applied to the purchase of our wheat and our cotton. 
Great Britain, rich as she is, cannot buy what she needs 
from us and pay for it only in gold. Commerce must of 
necessity consist in an exchange of products. A transfer 
of the art of making tin-plates would bring over to this 
country a few thousand somewhat objectionable people 
who would become consumers in very small measure of our 
wheat and of our cotton, while the means of payment of 
Great Britain would be diminished to the extent of the 
value of the tin-plates which she pays back to us for the 
products of our farms at the rate of nearly $30,000,000 a 
yearo This $30,000,000 annually received by Great 
Britain is now spent by her for our cotton, wheat, and 
provisions. If we deprive her of the means of payment 
to that extent — the tin-plate makers moved over here 
would become consumers in limited measure of the same 
articles. These goods require a large amount of capital 
and but a moderate amount of labor of a rather low grade, 
hence we should lose more than we should gain, even if 
success were attained in establishing this art, which does 
not, however, seem probable. We have no working 
people to spare for such work. 

The worst effect of this kind of interference with this 
course of trade is often to be found in the mere obstruc- 
tion to exports, which of necessity ensues from the cutting 
off of imports. Its effect in this country is the more 
malignant because the export of the excess of our prod- 
ucts of agriculture is one of the main elements in our 
continued prosperity. The proportion of the products of 
our farms exported, except cotton, may be small, but every 
one who is conversant with trade at all is well aware that an 
excess of even five per cent, of any given product may for 



PRO TECTION B Y EXEMP TION FROM TAX A TION. 6/ 

the time reduce the price In fivefold measure, and this is 
the matter of main importance to us. At this present 
moment the effect of a moderate supply of cotton has 
put the price at the lowest point ever reached but once 
before. We export more than ten per cent, of the aggre- 
gate of our farm products ; in some years our exports 
have amounted to nearly twenty per cent, of the whole 
product, computed at farm values. It is upon the sale for 
export of this excess that the price of the whole crop of 
everything depends. Consequently an obstruction to 
imports, of small apparent importance in itself, may exert 
an adverse influence on prices of farm products which are 
exported and therefore on the whole product, in a meas- 
ure which one can hardly comprehend except for the 
depression that has ensued. 

It therefore follows that the promotion of domestic 
industry, both in agriculture as well as in manufacturing, 
rests upon the free import of all articles of food and of 
crude or partly manufactured materials which are neces- 
sary to the processes of domestic industry, and upon the 
correspondingly free export of our great crops and of 
many kinds of manufactured goods in which we already 
excel all nations. It is manifest that if we were permit- 
ted to secure wool, iron, copper, and other crude materials 
which are necessary in the processes of our domestic in- 
dustry on the same terms with our foreign competitors, 
we should increase our markets in other countries in very 
great measure. We are even deprived of the free use of 
our own copper in competition with others, because the 
producers sometimes sell our surplus of copper to foreign 
consumers at a less price than is charged to our own. 

When this country fully believes in itself, — when It no 
longer subjects its own imagination to the humiliating 
idea that a free, intelligent, well paid, and fully nourished 



6S TAX A TlOISr AND WORK. 

people cannot compete with the underfed pauper laborers 
of Europe, we shall be enabled to take our true place 
among the nations. We shall then be far on the way 
toward the ultimate abatement of every national tax of 
every kind upon every import, except the taxes which we 
may put upon liquors and tobacco in order to support 
our government. When that condition is attained the 
true Protection to domestic industry will be established. 
It will then consist in Free Men, Free Soil, Free Speech, 
and Free Trade. 



CHAPTER XIII. 
Free Trade the Objective Point. 

The purpose of the writer in the preparation of this 
series of treatises has been to present the whole subject 
of national taxation in a reasonable and, to some extent, 
judicial manner, wholly free from party bias. This method 
of dealing with the subject has manifestly become a 
necessity, for the reason that as political parties are now 
divided, neither one has as yet been able to present a 
thoroughly complete and well digested measure of general 
tariff reduction. In each party there are underneath the 
surface great differences of opinion. In the Democratic 
party there are as yet relatively few men who are yet pre- 
pared to take the wholly- independent position which was 
assumed by Mr. Mills, Mr. Carlisle, the Messrs. Breckin- 
ridge, Mr. McMillin, and Mr. Wilson in framing what was 
known as the Mills Tariff Bill. Their first step was to 
put wool, hemp, flax, and other fibres into the free list, 
these being typical and somewhat important products of 
the particular States which these gentlemen themselves 
represented. They did not frame the measure known as 
the Mills Bill as a complete act, it was more of a tenta- 
tive measure or beginning than one intended as a finality. 
It did not deal effectually with ores, coal, or many articles 
of prime necessity in domestic manufactures. 

On the other hand, there are very conspicuous mem- 
bers of the Republican party whose objections to the 

69 



70 TAXATION AND WORK. 

McKinley act have only been overcome by the assumed 
necessity of party coherence. It is not probable that 
there are ten in one hundred Republicans who regard the 
McKinley act as one fit in any sense to be considered as 
a permanent adjustment of the tariff. 

There is also great confusion in the public mind upon 
this subject, and this confusion is of course reflected in 
varying action and demands upon the members of Con- 
gress. Hence it has become necessary in the present 
session to make a beginning only by introducing simple 
and separate measures for removing the duty from wool 
and a few other crude materials. 

On the other hand, we may be wholly dissatisfied with 
the motive, form, and substance of all the tariff bills that 
have been enacted, since the year 1861 inclusive, except as 
war measures ; yet they have been in force on substan- 
tially the same lines for almost a generation. Great 
branches of industry have become adjusted to these con- 
ditions. It is therefore expedient for all who take part in 
this discussion to treat this matter in a judicial way, so as 
to give a true direction to the process of tariff reduction, 
dealing especially with the element of time in the most 
careful manner in making great changes. 

It seems to be very certain that whoever may be elected 
President in November next, the majority of the House 
of Representatives, without strict regard to party lines, 
will be elected only upon the assurance of nearly every 
candidate that he will sustain a complete measure for the 
reduction of the tariff. Even if a majority of the mem^ 
bers of the Senate may not have been chosen upon that 
issue, it is yet very certain that a working majority will 
sustain any judicious measure of general tariff reduction 
that may have been carefully framed in the House of 
Representatives. In this view it becomes interesting to 
note the signs of the times. 



FREE TRADE THE OBJECTIVE POINT. 7 1 

The beginning of an alliance of members of both parties 
in dealing with financial questions has been brought about 
in the recent action upon the free coinage of silver. After 
the Presidential election is ended, in the second session 
of the present Congress, what is more Hkely to occur than 
that men who have co-operated together in endeavoring 
to establish the currency of the country upon a safe and 
solid basis should again co-operate in the reform of the 
present system of excessive and badly adjusted taxa- 
tion? 

It has been demonstrated that the revenue from liquors 
and tobacco under existing acts even now suffices to 
meet all the expenses of the government, except the pen- 
sions, with a margin over. In the second session of the 
present Congress, legislation will be directed toward mak- 
ing provision for the expenditures for the fiscal year 
beginning June 30, 1893, and ending June 30, 1894. In 
that financial year, according to the statements recently 
submitted by the Commissioner of Pensions, nearly all 
claims for pensions under existing acts will have been 
audited, to the end that there will be no longer any first 
payments or payment of arrears to be made. These first 
payments now constitute about one third of the outgo. 
After they are all liquidated the annual pension roll will 
not exceed the sum of $100,000,000 a year, if it comes to 
so much. When that point is reached another year will 
have elapsed, and the revenue from liquors and tobacco 
will then be so much in excess of the other expenditures 
as to cover a considerable part of the pension roll. The 
revenue needed from customs on other articles than liquor 
and tobacco may then be less than $100,000,000. 

It would therefore, be. wholly within the power of this 
Congress at its second session to abate all duties upon 
crude and partly manufactured articles that are necessary 
in the processes of domestic industry, and to frameasim- 



72 TAXA TION AND WORK. 

pie and consistent measure of duties upon other materials 
at such rates as might yield the desired revenue. It needs 
only that the people of this country should exert their 
will and make their will manifest, and then every obstacle 
that now stands in the way of such a simple and effectual 
method of dealing with the subject of taxation will vanish 
like dew before the sun. 

In anticipation of such an alliance of Republicans and 
Democrats, without regard to party affiliations, for tariff 
reform and for a reduction of taxation, it becomes expe- 
dient to deal with the fundamental principles of taxation. 
From the days of Alexander Hamilton, through the 
discussions in the time of Clay and Webster, thence down 
to the date in 1867 when the late Erastus B. Bigelow was 
one of the most conspicuous devotees of the protective 
system, as well as at the present time, the objective point 
of the protective system has been held to be ultimate Free 
Trade. The only difference between reasonable men — put- 
ting aside the dogma of '^ Protection with incidental 
revenue " as one that requires no further consideration — 
now is as to the time and method of beginning the reform 
of which the agreed objective point is ultimate Free Trade. 
This fact is demonstrated by the Republican measures for 
treaties of reciprocity. Such measures are merely indirect 
devices for attaining partial Free Trade by discrimination 
among countries and subjects of taxation, and also by the 
increase in the free list in the McKinley act. 

The time is therefore now ripe to deal with fundamental 
principles. The Republican party, as a party, has planted 
itself upon what it holds to be the '' Principle of Protec- 
tion^ Its representatives have constantly affirmed that 
any changes which may be made in existing acts for the 
collection of duties must be made only by those who will 
deal with it as a principle. The Democratic party has not 



FREE TRADE THE OBJECTIVE POINT. 71 

declared absolute Free Trade to be its motive, because 
that would involve a discontinuance of custom-houses. 
Under our present system it will long remain necessary 
for Free Trade to be qualified by the necessity for the 
collection of a certain amount of revenue from duties upon 
imports. 

Under such conditions it follows that the whole subject 
should be removed from party politics, and ought to cease 
to be an element in party divisions, to the end that all 
obstructions which have heretofore prevented men of 
either party from acting together may be removed, as 
they have been in dealing with the silver question. 

It cannot be doubted that it is the will of the people of 
this country that its unit of value shall remain what it 
now is ; to wit, a dollar which is worth as much after it is 
melted as it is in the coin. It is the will of the people of 
this country that no fiat dollar, or dollar made of silver 
that is not worth as much after it is melted as it purports 
to be worth in the coin, shall be coined without limit or 
continue to be made a full legal tender. It is the will of 
the people of this country that the money in which the 
workman is paid shall be equal in its purchasing power or 
value to the money in which banks and bankers must of 
necessity transact their business in order to maintain 
their credit and to retain the confidence of the business 
community. 

It is the will of the people of this country that its sys- 
tem of taxation shall be simple and plain ; that the sum 
of money raised by taxation shall not exceed what is 
required for the conduct of the government when eco- 
nomically administered ; and that all taxes that the people 
pay, the government shall receive. The problem is how to 
adjust legislation so as to give expression to these pur- 
poses. That is a question of practical legislation. 



74 TAX A TION AND WORK. 

Now it will be apparent that no true or just solution of 
this problem can be reached except through a discussion 
of the underlying principles which must govern any policy 
of taxation. If there were no necessity for a revenue to 
support the government, no sane man would propose to 
put a tax or duty upon anything either of foreign or do- 
mestic origin ; but since there is a necessity for raising a 
certain amount of revenue by duties upon imports, no 
judicious person would assess these duties without such 
discrimination in the choice of subjects of taxation and 
in the mode of applying the duties as would most effectu- 
ally promote domestic industry and protect home labor 
from injury. 

The objective point of both the systems now contend- 
ing for preference is the same. Their representatives, as 
a rule, are equally sincere in the conviction that their 
chosen method will most fully secure the objects named. 
What is called Protection and what is called Free Trade, 
qualified only by the necessity of a moderate tariff for 
revenue purposes, are simply names representing the same 
purpose. 

Ultimate Free Trade is the declared object of the advo- 
cates of what is commonly called Protection, to be reached 
at some future date, when certain conditions precedent 
have been secured. Free trade, qualified by a tariff for 
revenue only, is the objective point of the other side. 
The difference is only upon the question of the time when 
to begin so as to reach the objective point which is com- 
mon to both. Recourse may therefore be had to the 
simple elements of the case which may be developed by 
the consideration of two plain questions : 

First, the principle of Protection, what is it ? 

Second, the principle of Free Trade, what is it ? 

If there is a distinct underlying principle governing the 



FREE TRADE THE OBJECTIVE POINT. 75 

case, then, of course, the poHcy of the country must 
sooner or later become adjusted to that fundamental 
principle, whatever it is, because the definition of a prin- 
ciple is, '' a rule of action among human beings." If there 
is a principle underlying the one and not the other theory, 
then the one which is based upon a principle will in the 
end be adopted and will govern the policy of the country. 
English jurists have an excellent method of defining 
the meaning of words before proceeding to incorporate 
them in any acts of legislation. It may be well to adopt 
this method in dealing with the fundamental questions 
upon which our acts of taxation should be framed. That 
method will be adopted in the subsequent chapters. 



CHAPTER XIV. 

Attempted Definition of the Principle of Pro- 
tection BY Senators Sherman, Hoar, 
and Aldrich. 

In Webster's Dictionary the word Principle is defined 
as a '' truth admitted either without proof, or considered 
as having been before proved ; a settled law or rule of 
action in human beings." 

The word Policy is defined as " that system of measures 
which the sovereign of a country adopts and pursues as 
the best adapted to the interests of the nation." 

If a system of taxation can be founded upon a principle 
according to the definition given in the dictionary, any 
subsequent discussion of the matter must be without effect. 
If, however, that which is defined as a principle is merely a 
policy, then reasonable men may rightly change their 
views of what the policy should be according to their ex- 
perience or knowledge of the effects and conditions which 
have been developed under the application of that policy. 
The importance of this discrimination between a principle 
and a policy will become apparent as this subject is de- 
veloped. 

Among those who took part in promoting the protec- 
tive measures which were adopted subsequently to the 
war, no one attained greater influence than the late Eras- 
tus B. Bigelow. He was substantially the author of the 
Wool and Woollen tariff, of which the present provisions of 

76 



THE PRINCIPLE OF PROTECTION. "J "J 

the McKinley act on wool and woollens are but a new ad- 
justment. This original wool and woollen tariff was intel- 
ligently framed, and was justified on very simple grounds. 
It was held that there should be a specific duty upon 
foreign wool for the protection of the domestic wool- 
grower. It was believed that this duty would raise the 
price of all wool, domestic as well as foreign, and thus in- 
crease the cost of wool to the manufacturer. A provision 
was therefore carefully framed for assessing a specific duty 
upon woollen manufactures, the intention of which was to 
give exact compensation to the woollen manufacturer for 
the increased cost of raw material to which he would be 
subjected by the duty on wool. There was no conceal- 
ment and no reservation about this declared purpose. 

It was held by Mr. Bigelow and his associates that in 
this way the woollen manufacturer would be placed in the 
same position as that which he would hold if there were 
no specific duty either upon the wool or upon the goods. 
This matter having been adjusted, it was then held by Mr. 
Bigelow and his associates that there should be a moderate 
ad-valor em duty of twenty-five per cent, upon woollen and 
worsted fabrics, for the purpose of protecting the manufac- 
turers. The justification of this protective duty of twen- 
ty-five per cent, was the alleged higher cost of labor in 
this country as compared to the cost of labor in foreign 
countries. Ad-valorem duties were therefore imposed 
upon woollen and worsted fabrics in addition to the spe- 
cific compensating duties upon the raw wool, for the dis- 
tinct purpose of Protection, and this protective duty was 
at the rate of twenty-five per centum. Reference may be 
had to the arguments before the Committee of Ways and 
Means by which they were governed in framing these 
acts. Mr. Bigelow did not justify protective legislation 
on the ground of a principle. He held that a protective 



yS TAX A TION AND WORK. 

tariff should be adopted merely as a matter of policy. He 
and his associates presented the case to Congress as one 
to be governed by their choice or discretion. 

In his last pamphlet dealing with the protective system 
in 1877 ^^- Bigelow defined his position and that of his 
associates in these words : '' There is no ultimate principle 
of universal application included either in Free Trade or Pro- 
tection ; they are questions of policy T 

Mr. Bigelow's policy has been an utter failure ; the wool 
and woollen tariff has been altered, amended, and in- 
creased, each time under the direction of its friends, and 
the last state and condition of the wool-grower and the 
woollen manufacturer has been worse than the first. Is it 
not time to change a policy which the original promoter 
declared to be founded on no principle whatever ? 

It has been wholly upon the ground of policy and not 
of principle that the war tariff has been subsequently 
amended and altered by the remission of duties on tea, 
coffee, and sugar, by the enactment of the tariff of 1883, 
and by other changes down to the adoption of the Mc- 
Kinley act. Then came a very profound change in the 
declared purpose of the promoters of the protective theory. 
In the words of its author this ;/^w purpose is ^^ Protection 
with incidental revenue.'' It has been held in recent dis- 
cussions that the principle of Protection has become a 
settled law or rule of action which must govern our future 
policy, and which is not a subject of further discussion. It 
is also held the revenue should be the incident. Protection 
the end to be assured by a tariff. 

But to this perversion of principle and policy alike, only 
an insignificant fraction of the people or of the legislators 
of the country have ever given their adhesion. The choice 
is therefore presented to those who defend existing acts 
of tariff legislation, either to present a principle of taxa- 



THE PRINCIPLE OF PROTECTION. 79 

tion sustaining those acts, or else to justify the existing 
acts as true measures for securing the enforcement of a 
poHcy which is for the general welfare. 

In all the recent discussions in defence of the existing 
tariff acts, public speakers both in Congress and without 
have presented the case as one founded upon a distinct 
principle. That is to say. Protection in its technical sense 
as brought into effect by the McKinley act is claimed to 
be based upon an ^' admitted truth already proved, or 
upon a rule of action or settled law governing human 
beings." 

It may now be judicious to revert again to the diction- 
ary for a definition. What is Protection ? The definition 
is, " the act of protecting, defence, shelter from evil, pres- 
ervation from loss, injury, or annoyance." 

It therefore follows that those who would forbid the 
free exchange of the excess of the products of our fields, 
forests, mines, and of our factories which we do not want 
and cannot consume ourselves, for the goods and wares 
which are produced in other countries which we do want 
and can use in the processes of domestic industry, must 
justify such interference with the laws of commerce upon 
the ground that such a free exchange of product for pro- 
duct will inflict " loss, injury, or annoyance," upon the 
people of this country. They must justify these acts upon 
the ground that it is the function of the legislator to 
" defend " the people of this country so as to give them 
"shelter from an evil," which may ensue if they are 
allowed to have their own way, and to exchange their 
products with other countries on such terms as appear to 
them to be profitable. 

Can there be any such justification ? It is apparent 
that unless there is a profit, gain, or advantage to both 
parties in any mutual service or exchange, then such ex- 



80 TAXATION AND WORK. 

change, in which all commerce consists, must cease. No 
trade or commerce has any duration among men, and no 
transactions are repeated in which any party or nation 
gains at the loss of any other. There must be a mutual 
service and a mutual benefit in all exchanges, else they 
stop. All business experience merely consists in so con- 
ducting trade and commerce that it shall be profitable to 
the buyer as well as to the seller, and vice versa. This being 
an elementary truth, how can any obstruction to such ex- 
changes be defended ? The so-called ^' Principle of Pro- 
tection " must be defended, if at all, consistently with the 
definition of the words as those definitions are given in 
the dictionary. Lest the writer might do an injustice to 
those who claim to represent the '' Principle of Protection '* 
he lately transmitted a letter to several of the leading 
supporters of the McKinley act, asking them the simple 
question : '* What is the principle of Protection ? " 

Among all those, ten in number, to whom this letter was 
addressed, Mr. William McKinley, Jr., was the only one 
who failed to make a reply. The first missive was sent to 
Senator George F. Hoar, of Massachusetts, and through 
an error of the stenographer he was asked to define the 
principle of Free Trade, which he did in the following 
terms : 

" You ask me to give you in a concise way my conception of the Principle 
■ of Free Trade. I am not sure that your type-writer or secretary has not 
accidentally mis-stated your desire. I should have supposed you would have 
been more likely to ask me to make for you a statement of the principle of 
Protection in which I am a believer, than the principle of Free Trade, in which 
I suppose you are a believer. But I will state the doctrine of Free Trade as 
I understand it. 

" I suppose that the principle of Free Trade does not necessarily imply that 
there shall be no taxes or duties upon imports, but it regards such tax or 
duty as a necessary evil, like any other mere tax M'hich compels men to con- 
tribute of their own property to support the government. But I suppose 
that the principle of the free-trader is that no such duty or tax should belaid 



THE PRINCIPLE OF PROTECTION. 8t 

or determined in its amount by the desire to encourage the establishment, 
in the country raising it, of any industry or employment which would not 
otherwise be established, or to increase such employment or industry in con- 
sequence of the duty or tax to an extent to which it would not be increased 
without it ; or to maintain, and continue, in consequence of the tax or duty, 
any existing industry or employment which would not be maintained or 
continued without it. 

" I am faithfully yours, 

" Geo. F. Hoar. 

Upon discovering the mistake Senator Hoar was asked 
to define the principle of Protection, and to this he made 
the following response : 

"Worcester, Mass., Nov. i8, 1891. 

" You meant, as I thought, to ask me to state the Principle of Pro- 
tection. I think that you can perhaps infer my definition of Protec- 
tion from my definition of Free Trade which I sent you in my letter 
of Nov. 13th. I think Protection as used in our political and economic 
discussions, is the imposing of such duties on the importation of for- 
eign products as will prevent a domestic producer of the same article 
from having his business destroyed by the competition of the foreign 
import, while he establishes it ; or will enable him to maintain the 
production without its being destroyed or rendered unprofitable by the 
competition of the foreign article after it is established, when he could 
not otherwise so establish or maintain it ; or the enabling him to pay 
larger wages in such production than he could pay if he were subject to the 
foreign competition. 

* ' I do not suppose that such Protection will ordinarily result in permanently 
raising the domestic price or in permanently arresting or diminishing its 
fall. But it protects the domestic producer against large combinations of 
foreign capital or against temporary disturbances in the market price by 
throwing upon the American market the surplus products of the foreign 
countries at less than the cost of their production, leaving the foreigner to 
raise his price again if that be found practicable, after the domestic manu- 
facture has been destroyed. 

" If you propose to quote my definition in public, perhaps justice to me 
would require that you should quote my definition of Free Trade as well as 
my definition of Protection, 

*' I am faithfully yours, 

" Geo. F. Hoar." 



82 TAXATION AND WORK. 

Senator Nelson W. Aldrich, whose ability in defending 
the McKinley act in its details is deserving of all the 
credit due to the successful advocate in a bad cause, 
replied to the question in the following terms : 

" United States Senate, Washington, D. C, 
Dec. 9, 1891. 
* ' I have your favor of recent date asking me for a concise definition of the 
principle of Protection. The only principle I know of universal application 
to our customs legislation is that it should be of such a character at all times 
as to secure the highest degree of vi^elfare to the people of the United States. 
The practical application of this rule of action under existing conditions 
leads to the admission of one class of articles free of duty while it imposes 
upon another class revenue duties, and upon still another levies protective 
duties. It also provides for the free admission of articles or the reduction 
of duties through agreements for reciprocal trade. To state definitely just 
what articles should be included in each of these classes and the reasons for 
such inclusion would require more time than I have at my disposal, and 
more space than you would be willing to give to a ' concise ' definition. 

' ' Very truly yours, 

" Nelson W. Aldrich." 

There are very many persons who so fully concur in 
the defence of honest money and sound finance advocated 
by Senator John Sherman, that they might well hope to 
reach concurrence with him also in .the matter of taxa- 
tion. Senator Sherman made the following reply : 

" Senate Chamber, Washington, Nov. 30, 1891. 
"It is difficult to answer your note of the 25th by a phrase or two. The 
common arguments in support of the principle of Protection as a necessary 
feature of every tariff law have been so often stated that if I had time I 
could select from the official recommendations of nearly every President up 
to and including General Jackson, clear and strong declarations in favor of 
Protection as an object equal in importance to that of revenue in our tariff 
laws. It is an axiom recognized and practised by all nations that a duty on 
imported goods is the most convenient, the cheapest, and the best mode of 
levying revenue for the support of any government, whatever may be its 
form. It is equally clear that a uniform duty on all kinds of imported goods 
would be unjust to the consumer. Therefore a discrimination of rates on 



THE PRINCIPLE OF PROTECTION. 83 

different articles is unavoidable. The best policy for any nation is that 
which, while securing sufficient revenue, will promote a diversity of produc- 
tions and as extensive a range of employments as may be permitted by the 
climate and natural resources of the country. In the United States every 
tariff law since the beginning of the government has recognized the prin- 
ciple and acted upon the policy of Protection. The degree of Protection 
and the amount of revenue required must vary from time to time according 
to the wants of the government, or the condition of domestic industries. 
Upon these details there has been, and always will be, a difference of 
opinion, but whatever may be the theoretical views of free-traders, the prac- 
tical framing of a tariff law necessarily involves a consideration of the rates 
which will either injure or improve home industries. A practical business 
man would seek to give to each industry suitable to our climate that degree 
of Protection which will compensate for the difference in the rate of wages 
in our and other countries, and with a view tp induce capital to embark in 
new enterprises, and to employ labor that would not be degraded by wages 
below the standard of comfort which American laborers ought to enjoy. 

' ' Very truly yours, 

" John Sherman," 

Hon. Thomas B. Reed sent me in reply to my request 
a copy of his review of the Mills Tariff Bill. As I did not 
find any statement of a principle I made a second request, 
to which Mr. Reed submitted the following rejoinder : 

"You ask me to state the principle of Protection, defining the word 
* principle ' as ' a rule of action and admitted truth requiring no proof.' If 
you or anybody else could state the principle of Protection in such form that 
it would be an * admitted truth, requiring no proof,' you would not be able 
to write your articles in favor of Free Trade, nor would I have made a 
speech." 

In this Mr. Reed touches the very nub of the case, so 
as to bring out the fact that the distinguished gentlemen 
whose replies have been previously given have simply 
justified 2, policy under the guise of 2, principle. 

Other letters from many other correspondents are all in 
the same direction. The space available for this discus- 
sion forbids giving any more of the answers that have 
been received. 



84 TAX A TION AND WORK. 

I have given enough to make it apparent that in no 
one of these statements is there any definition of a prin- 
ciple according to the construction which would be given 
to that word in any court of justice. Each respondent 
gives the definition of a policy^ which he thinks it would 
be for the best interest of the country to maintain, but 
which many other persons of equally sound judgment and 
capacity believe would work injury instead of benefit. 

It may be remarked, however, that the defence of the 
policy of Protection rests wholly upon the assumption 
that because the rates of wages are higher in this country 
than they are in others, therefore the cost of labor in each 
unit of product must be greater, and that leads to the 
final point upon which I believe Mr. James G. Blaine once 
made a declaration, that in the end the tariff question is 
a mere question of Avages. 

If it can be proved that the rates of wages — which are 
admittedly higher in this country than in any other, have 
been attained in spite of the interference with commerce 
in the free exchanges of this country, and not by reason 
of that policy, then the whole system must fall. 

If high rates of wages are the necessary correlative or 
result of the production of the goods and wares, from the 
sale of which the wages or earnings are recovered or 
derived, because of the low cost at which such products 
can be made in this country, then it would of necessity 
ensue that we might control the commerce of the world, 
and should remove every obstruction thereto. 



CHAPTER XV. 
Hamilton's Policy. 

The replies of the Senators previously given to the re- 
quest for a definition of the principle of Protection have 
given their conception of the facts, especially in respect to 
wages, on which they justify their policy. I next endeav- 
ored to find gentlemen of authority, connected with the 
higher institutions of learning, who might, either through 
their knowledge of economic history, or their position as 
teachers of political economy, be rightly requested to reply 
to the same question. It is singular, however, that there 
is but one gentleman to be found within my knowledge, 
connected with any college or university of repute, who 
sustains the so-called principle of Protection, Professor 
Robert Ellis Thompson of the University of Pennsylva- 
nia. His reply to my question is as follows : 

"Philadelphia, Dec. 4, 1891. 

"It is not so easy to make a brief statement of * the principle of Protec- 
tion ' as it is to render that service for the rival theory. Free Trade rests on 
theory and assumes ideal conditions. Protection rests on experience, and 
deals with actual conditions. These latter always are complex, and do not 
lend themselves to neat formalization. 

" In making the attempt to supply what you ask, I do so under protest 
that what I write is inadequate. 

"Nations are industrial as well as political units. To their industrial 
welfare a diversification of industry is indispensable. Following the law of 
biological classification they take high industrial rank or law, according to 
the measure of the industrial differentialism of the parts from each other, and 
from the whole. This differentialism is the normal process of industrial 

85 



86 TAXATION AND WORK. 

growth, which would proceed equably and equally in all countries, if the 
conditions were the same in all. But as the world now is, no two are equal ; 
and the more advanced find their real (or supposed) interest in monopolizing 
what they regard as the more profitable industries, and in keeping others on 
the level of industrial uniformity. They wish to supply the others with 
highly elaborate products, and take coarser in exchange. The experience of 
these others is that such exchanges are unprofitable, as exposing them to the 
largest risks in production, laying upon them the heaviest cost of transporta- 
tion, and leaving them incapable of military defence. Protection is their re- 
sistance to this programme, and is exercised for them by their government, 
for the reason that it is the business of government to ' promote the general 
welfare,' by exercising a supervision over the nation's industrial growth with 
a view to the proper co-ordination of its various branches. This duty of 
government is not tied to any kind of legislative method, such as discrimi- 
nating duties on imposts. It has been exercised by prohibitions, bounties, 
and other measures. 

" I should define protection as the policy which, by the collective action 
of the nation, seeks to divert a part of its capital into a channel in which it 
would not flow otherwise, and which experience shows to be for the general 
benefit. 

" Very truly yours, 

" R. E. Thompson." 

It will be observed that while the Senators rest their 
justification of a high tariff upon an assumed difference in 
the cost of labor in this as compared to other countries, 
which excess of cost they attribute to the admittedly 
higher rates of wages, Prof. Thompson justifies the policy 
upon the ground that " the collective action of the nation 
may rightly divert a part of its capital into a channel into 
which it would not otherwise flow, and which experience 
shows to be for the general benefit." 

Before reviewing this letter it may be well to revert to 
the beginning of the protective system in this country. 
In the discussion of the tariff question Alexander Hamil- 
ton, in the celebrated Report on Manufactures, of 1791, 
was called upon to meet a misapprehension which had 
then prevailed not only in this but in many other coun- 
tries, that all wealth was derived from the soil, and that 



HA MIL TON'S FOLIC Y, 8/ 

the processes of manufacture added nothing thereto. 
This misapprehension which had dominated the pohcy of 
nations is now so obsolete that it has a grotesque sound, 
yet a large part of Hamilton's argument was devoted to 
an analysis of that idea. Hamilton justified revenue 
duties so adjusted as to give some advantage or stimulus 
to domestic industries and manufactures upon other 
grounds while exposing this fallacy. He said : 

"If the system of perfect liberty to industry and commerce were the 
prevailing system of nations, the arguments which dissuade a country, in the 
predicament of the United States from the zealous pursuit of manufactures 
would doubtless have great force. It will not be affirmed that they might 
not be permitted, with few exceptions, to serve as a rule of national con- 
duct But the system which has been mentioned is far from 

characterizing the general policy of nations. The prevalent one has been 
regulated by an opposite spirit. 

' ' The greatest obstacle of all to the successful prosecution of a new branch 
of industry in a country in v/hich it was before unknown, consists, as far as 
the instances apply, in the bounties, premiums, and other aids which are 
granted in a variety of cases by the nations in which the establishments to be 
imitated are previously introduced." 

He then refers to the common system of bounties upon 
exports and other artificial methods of promoting com- 
merce in European countries. Hamilton rests no argu- 
ment upon the difference in wages and the higher rates 
which he refers to and considers an advantage on the part 
of the United States. 

The most singular fact bearing upon Professor Thomp- 
son's justification by experience is found in Hamilton's 
list of the manufacturing arts which were, at that time in 
1 791, as he states, successfully established in this country. 
The following is the statement : 

" To all the arguments which are brought to evince the impracticability of 
success in manufacturing establishments in the United States, it might have 
been a sufficient answer to have referred to the experience of what has been 



88 TAXATION AND WORK:, 

already done. It is certain that several important branches have grown up 
and flourished, with a rapidity which surprises, affording an encouraging 
assurance of success in other attempts. Of these it may not be improper to 
enumerate the most considerable. 

*' I. Of skins — Tanned and tawed leather, dressed skins, shoes, boots, 
and slippers, harness and saddlery of all kinds, portmanteaus and trunks, 
leather breeches, gloves, muffs and tippets, parchment and glue. 

"2. Of iron — Bar and sheet iron, steel, nail rods and nails, implements 
of husbandry, stoves, pots and other household utensils, the steel and iron- 
work of carriages, and for ship-building, anchors, scale-beams and weights, 
and various tools of artificers, arms of different kinds, though the manufac- 
ture of these last has of late diminished for lack of demand. 

" 3. Of wood — Ships, cabinet wares and turnery, wool and cotton cards, 
and other machinery for manufactures and husbandry, mathematical instru- 
ments, coopers' wares of every kind. 

"4. Of flax and hemp — Cables, sail-cloth, cordage, twine and pack- 
thread. 

" 5. Bricks and coarse tiles and potters' wares. 

" 6. Ardent spirits and malt liquors. 

"7. Writing and printing paper, sheathing and wrapping-paper, paste- 
board, fullers* or press papers, paper-hangings. 

" 8. Hats of fur and wool, and mixtures of both, women's stuff and silk 
shoes. 

"9. Refined sugars. 

" 10. Oils of animals and seeds, soap, spermaceti, and tallow candles. 

"11. Copper and brass wires, particularly utensils for distillers, sugar- 
refiners, and brewers ; and irons and other articles for household use, 
philosophical apparatus. 

"12. Tin wares for most purposes of ordinary use. 

"13. Carriages of all kinds. 

" 14. Snuff, chewing and smoking tobacco. 

"15. Starch and hair powder. 

" 16. Lamp-black and other painters' colors. 

"17. Gunpowder. 

" Besides manufactories of these articles, which are carried on as regular 
trades and have attained to a considerable degree of maturity, there is a vast 
scene of household manufacturing, which contributes more largely to the 
supply of the community than could be imagined without having made it an 
object of particular inquiry. This observation is the pleasing result of the 
investigation to which the subject of this report has led, and is applicable as 
well to the Southern as to the Middle and Northern States. Great quan- 
tities of coar?e cloths, coatings, serges and flannels, linsey-woolsey, hosiery 
of wool, cotton and thread, coarse fustians, jeans and muslins, checked and 



HA MIL TON * S FOLIC K S9 

striped cotton and linen goods, bed-ticks, coverlets and counterpanes, tow 
linens, coarse shirtings, sheetings, tovvelings and table linen, and various 
mixtures of -wool and cotton, and of cotton and flax are made in the house- 
hold way, and, in many instances, to an extent not only sufficient for the 
supply of the families in which they are made, but for sale,, and even, in 
some cases, for exportation. It is computed in a number of districts that 
two-thirds, three-fourths, or even four-fifths of all the clothing of the in- 
habitants are made by themselves. The importance of so great a progress 
as appears to have been made in family manufactures, within a few years, 
both in a moral and political view, renders the fact highly interesting. 

" Neither does the above enumeration comprehend all the articles which 
are manufactured as regular trades. Many others occur, which are equally 
well established, but which, not being of equal importance, have been 
omitted. And there are many attempts, still in their infancy, which, 
though attended with very favorable appearances, could not properly have 
been comprised in an enumeration of manufactories already established. 
There are other articles, also of great importance, which though strictly 
speaking manufactures, are omitted as being immediately connected with 
husbandry, such are flour, pot and pearl ashes, pitch, tar and turpentine, 
and the like." 



If careful consideration be given to Hamilton's list, the 
statement which has been previously made in this series 
will be justified. There is not a single important branch 
of manufacturing industry — except those which have been 
developed by subsequent inventions — now established in 
this country, which was not, according to Alexander 
Hamilton, well established and successful prior to 1791. 
Among the arts which have been developed added sub- 
sequently to 1791 and through subsequent invention, now 
to be found in this country, the only one of any conspic- 
uous importance is the manufacture of cotton. 

One may therefore contest the ground upon which 
Prof. Thompson sustains the so-called principle of Protec- 
tion, by the proof that is found in Hamilton's evidence of 
success in manufactures, that experience does not justify 
the claim of the advocates of a high tariff to diversify in- 
dustry, to maintain wages, or to add to the general pro- 



90 TAXATION AND WORK, 

duct of a country. Experience may be cited to prove the 
very reverse of all these conditions. 

Reverting now to the question of wages, it is important 
in the first instance to submit some general considerations 
to be subsequently dealt with in more minute detail. In 
1880 agriculture gave occupation to forty per cent, or 
more of all the people who are occupied for gain in this 
country. The wages earned by those who work for wages 
in farm industry are higher than they are in any other 
country with the exception of Australia and New Zealand. 
The product of agriculture was valued at the farms in 
1880 by the Commissioner of Agriculture, on a revision of 
the census figures, at a fraction under four thousand mil- 
lions ($4,000,000,000). Taking no cognizance of the small 
exchanges between ourselves and the neighboring Do- 
minion of Canada, to whose people, owing to our advantage 
in an earlier spring, we sell more of the products of agri- 
culture than we buy, there were not in 1880, and are not 
now, five per cent, of the domestic products of agriculture 
of which any corresponding product could be imported 
from a foreign country. These articles of possible import 
consist of sugar, hemp, flax, tobacco, and wool, and a few 
other insignificant articles. Hemp and sugar have been put 
into the free list ; tobacco, wool and flax are now the only 
products of agriculture in whose behalf tariff Protection 
is demanded ; they do not now constitute in value two 
dollars In one hundred of the products of agriculture. 
The wool of Australia and New Zealand Is produced at 
higher rates of wages than prevail in this country, yet a 
duty Is demanded for protection against the import of 
such wool upon the ground of its low cost of production. 
Every other product of our domestic agriculture is pro- 
duced at a lower cost and at higher rates of wages than 
prevail in any other country. 






HAMIL TON'S POLICY. 9I 

The protective system cannot, of course, be invoked in 
behalf of those who are occupied for gain in professional 
or personal service or in trade and transportation. Under 
the head of manufactures, mechanics, and mining, the 
persons occupied in 1880 numbered 3,837,112. 

In the specific list of manufacturing, mechanical, and 
mining establishments, in which the work is done which 
might be in part subjected to foreign competition, the 
total number was 2,732,595, of whom 2,019,045 were males 
above sixteen, 531,069 females above fifteen, and 181,921 
young persons. The product of these establishments, 
valued at the works, amounted to $5,369,579,191. The 
cost of the materials used was $3,396,823,549, sum of 
wages $947,953,795. It will be observed that the cost of 
materials comes to 63^^ per cent., the cost of labor i7yf-o 
per cent. But, under this title there are listed establish- 
ments like sugar refineries and meat-packing establish- 
ments, in which the cost of labor is very small and the 
cost of the materials is very large. Eliminating such 
classes, it may fairly be considered that the proportion of 
labor which is directly exerted in the factory or the work- 
shop is substantially twenty-five per cent, of the cost of the 
goods. According to the figures of the Commissioner on 
Woollen and Worsted Manufactures in 1890, lately pub- 
lished, the percentage of labor is given at twenty-three; 
material at sixty per cent. 

The question may now be asked. What are these mate- 
rials which enter into the various processes of the manu- 
facture of machinery, cars, wagons, boots and shoes, 
textile fabrics, food preparations, food in its secondary 
condition, chemicals, and the like ? They are the primary 
products of the field, the forest, and the mine. With 
respect to all the chief products of the field, such as 
cotton, grain, hay, and the like, there can be no foreign 



9^ TAX A no AT AND WORK. 

competition with us. These articles come into the cate- 
gory of those which are produced at the lowest labor cost 
and at the highest rate of wages. 

Wool is the sole product of the field, except tobacco 
which must be separately treated, on which any considera- 
tion is claimed that is or can be given in tariff legislation. 
With respect to leather, lumber, marbles, glass, and the 
like, and with regard to the ingredients of fertilizers and 
a vast number of other chemical products, no other coun- 
try approaches us either in the abundance of the supply 
of crude materials or in the facility with which these 
resources can be worked at high wages and low cost. 

With respect to metal or the products of the mine, 
there can be no competition by other countries with us in 
copper, lead, oil, and iron, except in the latter case in 
regard to special qualities intended for particular purposes. 
If, then, the duties on crude materials were wholly re- 
moved, there would remain only the question of wages to 
be dealt with in specific manufacturing industries. 

It will be remarked that if there were no duties upon 
the materials which are used in the processes of manu- 
facturing industry this country would hold a superiority 
over all others in the abundant supply of crude materials 
derived from the greatest natural resources, from which 
the highest rates of wages are derived in converting them 
' to use at the lowest cost per unit of product. 

We are thus led to the simple question of the expe- 
diency of tariff Protection in respect to those branches of 
industry to which thought is apt to be limited when the 
word manufactures is made use of. The relation of wages 
to the cost of labor in those specific branches of domestic 
industry will be dealt with in the subsequent chapters. 



CHAPTER XVI. 

Tariff Protection does not Raise Wages. 

In the last chapter the possibiHty of applying the pro- 
tective idea to the building up of specific branches of 
industry within the limits of this country by obstructing 
imports, or by enhancing the cost of imported articles 
even for the time being, has been narrowed down to those 
special branches of industry which are included under the 
title of " Statistics of Manufactures " in the census reports 
of the United States. 

It has been demonstrated that the number of articles, 
and the proportionate value of such articles as could be 
imported which belong under the title of " products of 
agriculture," is so insignificant as not to constitute an im- 
portant element in the discussion of the subject. It may 
also be remarked that the total number of persons occu- 
pied in mining who could under any conceivable condi- 
tions be affected by foreign competition also represents 
such an utterly insignificant fraction of the working popu- 
lation as to make the application of the legal aphorism 
^' de minimis nojz curat /^;r " wholly applicable to them. 
The only branch of mining industry on whose behalf Pro- 
tection has been seriously invoked is that of the produc- 
tion of iron ore. In this branch of mining the total 
number of persons employed in the census year 1890 was 
only 36,341, their average earnings being $35/ each for 
the year ; a rate somewhat less than those of a common 

93 



94 TAXA TION AND WORK. 

laborer engaged in other occupations. Moreover, the 
most competent and skilful men who conduct the iron 
industry have proved that the more the ores of Spain and 
Cuba are admitted freely the more the domestic ores of 
iron will be required. The case is precisely analogous to 
that of wool, in which instance the duties on foreign wool 
have resulted in the depression of the price of domestic 
wool to the lowest prices ever known. 

We may therefore give consideration to the specific 
branches of industry which are listed in the volume relat- 
ing to the statistics of manufactures of the United States 
Census of 1880 under that title. It will be observed that 
the number of persons — men, women, and children — occu- 
pied in these manufacturing arts was 2,732,595 ; their aver- 
age earnings in the census year were three hundred and 
ten dollars ($310) each. But it may not be assumed that 
such a very low compensation corresponded to the full 
employment for the year. It fell to the writer to compute 
the data of the cotton manufacture according to the sched- 
ules which had been prepared. The conclusion which he 
reached was this : that, since the new mills, of which 
many were constructed during the year, were included 
without regard to the time of their operation, while 
'Others, owing to circumstances, were stopped for a part 
of the year, the sum of wages should have been increased 
by twenty per cent. But there are many arts that are 
listed under the title of manufactures that can only be 
conducted at certain seasons, therefore this sum of wages 
would represent even less than three fourths of the year. 
Giving due regard to this element of uncertainty which 
the census authorities of 1890 have endeavored to correct, 
it would probably be safe to estimate that the actual 
average earnings of those who are occupied under this 
title in 1880 approximated four hundred dollars ($400) 



TARIFF PROTECTION DOES NOT RAISE WAGES. 95 

each for a full year's work. Since 1880 there has been a 
marked increase in the rates of wages or earnings of all 
occupied for gain above the grade of common laborers. 
So far as the writer has been able to obtain the data, this 
advance in rates of wages may be estimated at from ten 
to thirty per cent, as compared to the rates of 1880; the 
proportionate advance in each class being in ratio to the 
relative skill required in the work. The wages of the 
common laborer have not advanced very much, but he 
has been rendered able to buy more for his wages on 
account of the reduction in prices ; the skilled laborer has 
secured the highest rates of earnings ever known in this 
or any other country and can also buy more for each 
dollar. 

The advocate of Free Trade who denies this advance 
makes a mistake ; the advocate of Protection who attrib- 
utes this advance to a high tariff makes a greater mistake. 
The conclusion which the writer has reached after a very 
long study of the subject is that the direct effect of a pro- 
tective tariff upon protected industries in respect both to 
profits and wages has been greatly exaggerated by both 
parties in the discussion. Its effect in stimulating a few 
branches of industry is hurtful rather than otherwise, 
being apt to end in a local over-production ; this excess, 
owing to the higher cost of materials under the present 
tariff, cannot be exported, and it therefore depresses 
prices until the over-production for our own use is 
stopped. The effect upon the general progress of the 
country has not been felt in any considerable measure 
because of the very limited number of industries of which 
a product of like kind could under any conditions be 
imported. 

On the other hand, the evil effect of the obstruction to 
the exchange of our own products for those of foreign 



9<5 TAXATION AND WORK. 

countries can hardly be exaggerated, because this influence 
is felt in stopping the export of that excess of domestic 
products which we cannot consume ourselves and which 
can only be sold for export. The prices of this excess 
become a regulator or determining factor in the price of 
all our great crops. The high-tariff system has in my 
judgment worked privation, qualified in some slight meas- 
ure for short periods by somewhat excessive profits, but 
has been without permanent influence on wages unless to 
retard the advance in some small measure ; this general 
advance has nevertheless been constantly in progress. 

The space permitted in this series will not allow a com- 
plete analysis of the statistics of manufactures. The 
census documents, however, are of ready reference, and it 
needs but a short consideration of a very few branches of 
industry to demonstrate the point under discussion. In 
a previous chapter this subject has been touched upon 
with reference to titles in dealing with the census of 
occupations. 

Referring to the statistics of manufactures, we find at 
the head, — Agricultural Implements. In this branch of 
industry we lay claim to excel nearly every other nation, 
and, in spite of the relatively higher cost as compared to 
other countries, due to the duties upon iron, steel, and 
other articles which are the component materials of chief 
value in this branch of industry, we are large exporters of 
this class of goods. Moreover, the average wages in this 
art are much higher than the average disclosed by the 
general statistics of manufacture ; the amount earned by 
each person in the census year having been very nearly 
four hundred dollars ($400), without making any addition 
for full time to what is disclosed by the figures them- 
selves. Actual average probably nearer $500. 

Under the next title of considerable importance we 



TARIFF PROTECTION DOES NOT RAISE WAGES. 9/ 

come to Blacksmithing. It goes without saying that the 
industry of the blacksmith belongs of necessity to the 
place where he works. There can be no foreign competi- 
tion of any moment with him. Brick- and Tile-making 
gives employment to a large force of stalwart men with 
whom there can be no foreign competition ; Bread and 
Bakery products the same. Carriages, Wagons, and Street 
Cars are made almost exclusively and of necessity within 
the hmits of the country, and of them we are also ex- 
porters. The wages earned in this branch of industry are 
very high relatively to all others, the workmen making 
their goods at low cost. 

Cheese- and Butter-making is included under the title 
of manufactures, of which products we are large exporters. 
In Clocks we excel all nations. 

Whether we should import any Clothing, except as a 
mere " fad " or fashion from other countries, cannot be 
determined until the materials are suppHed to our 
clothiers on even terms with their competitors in other 
countries. 

Flour, Grain, and Milling products count very heavily 
under the head of manufacturing, giving employment to 
a very large force at very high wages relatively ; of course 
there can be no foreign competition. 

In Furniture we excel at high wages and low cost, ex- 
porting it in no inconsiderable measure. In Lumber and 
Wood-working we find one of the most considerable items 
under the title of manufactures. In this, again, we abso- 
lutely need the product of the Canadian forests in order 
to prevent and stop the destruction of our own. 

Slaughtering and Meat-packing count for a very large 
element under the title of manufactures. In this, again, 
the wages are very high and the cost of the conversion of 
the product very low. 



gS TAXATION AND WORK. 

In short, when a thorough and judicial examination is 
made of this list of manufactures, the number of branches 
of industry is very small in which any considerable foreign 
competition could under any circumstances exist, or in 
which articles could be imported from any other country 
of like kind ; while the number of persons who could be 
in part subjected to foreign competition is distinctly less 
than one-half of the whole number included in this 
specific census list. Again, a very large part of those who, 
under our present conditions, are subjected to foreign 
competition in some measure, would be wholly relieved 
from foreign competition by removing the tariff tax from 
the crude or partly manufactured materials which enter 
into the processes of the specific branches of industry in 
which they are employed. 

My own analyses of the occupations of 17,400,000 men, 
women, and children, who were occupied for gain in 1880, 
led me to the conclusion that not exceeding 1,200,000 
were engaged in any kind of work of which a product of 
like kind could be imported, of whom 200,000 were occu- 
pied in agriculture. On the other hand, computing num- 
ber of persons by ratio to value of exports, 1,400,000 
occupied in agriculture and 200,000 in manufactures 
depended wholly on sales of their product for export. 

SUMMARY. 

Total number occupied for gain 17,400,000 

Subject in part to foreign competition : 

Manufactures 1,000,000 

Agriculture ,.,,... 200,000 

1,200,000 

Producing wholly for export : 

Agriculture 1,400,000 

Manufactures 200,000 

1 , 600, 000 

Directly affected by tariff legislation . . 2,800,000 

Affected indirectly, but occupied in 
work of which the product could 
neither be imported nor exported. . 14,600,000 



TARIFF PROTECTION DORS NOT RAISE WAGES. 99 

It is clearly proved by the figures of the comparative 
wages in the arts in whose behalf the Protection of a high 
tariff has been invoked, that these wages are relatively 
lower than in the arts which can not be subjected to 
foreign competition. It may also be held and would 
surely be proved by a purely judicial observation, that 
there has been no excessive profit covering a long period 
either in the textile or metal industries that have been 
stimulated by a protective tariff. According to the ob- 
servation of the writer, covering fifty years, the protected 
industries have been subject to greater fluctuations, greater 
variations, and to heavier losses than almost any other 
branches of industry that can be named. Abnormal 
profits have sometimes been attained ; notably in the case 
of steel, but these profits may be attributed in much 
greater measure to the control of the Bessemer and other 
patents by a comparatively small number of persons, than 
to duties on imports. 

The claim made by the advocates of the McKinley act 
and the various high tariffs that have been enacted sub- 
sequently to the war tariff, under which the rates of duty 
then imposed have been actually raised, that the prosper- 
ity of this country and the advance in wages which have 
marked the last twenty-five years are to be attributed to 
this system, has no support whatever in the facts, for the 
reason that the direct effect of such acts is limited to such 
a small proportion of those who are occupied for gain as 
to make it one of the minor or lesser factors in any aspect 
of the case. 

Those who attribute any general influence upon the 
rate of wages to the stimulus that has been given to pro- 
tected industries, even admitting that the effect of that 
stimulus has been a very considerable additional develop- 
ment of work on those lines, wholly fail to take note of 
the fact that we pay for our imports with our exports. 



lOO TAXATION AND WORK. 

The rates of wages in the production of what we export 
are relatively much higher than they are in the conduct 
of the arts which have been stimulated by Protection. 
In fact, the chief argument for the Protection of manu- 
factures has been the high rates of wages which could be 
earned in the conduct of agriculture. Therefore, no one 
can fail to admit that, so far as an obstruction to imports 
is also an obstruction to exports, the results might be a 
reduction of wages rather than an advance in the rates. 
Such I think, has been the fact, although the influence of 
the system upon wages has, I think, been exaggerated 
on both sides. 

On the other hand, the heavy advance in the rates of 
wages in all the arts that have not been subjected to the 
stimulus of the tariff while the cost of labor in each unit 
of product has been reduced, gives conclusive evidence 
that the influences to which our prosperity may be attrib- 
uted are something wholly outside of the fiscal policy of 
the country. The progress of the country can rightly 
and only be attributed to the application of science and 
invention to all the arts in which we excel, — to the de- 
velopment of the power of steam and electricity, — to the 
reduction in the cost of transportation, both by land and 
by sea, — and yet more than all to the continental system 
of free exchange among the people of the several States 
that make up the Union. 

It may be judicious to give one example of the potent 
forces which have been tending to a reduction in the 
price of articles of prime necessity, accompanied by an 
advance in the rate of wages, by reference to a single 
incident. In a discussion upon the silver question at a 
meeting of the British Association for the Advancement 
of Science in Manchester in September, 1887, a great 
deal was said by advocates of what is called bi-metallism 



TARIFF PROTECTION DOES NOT RAISE WAGES. lOI 

Upon the injurious effect of the competition of India on 
a silver basis with the production of wheat in Great 
Britain on a gold basis, it being assumed that the dis- 
count on silver as compared to gold worked as a premium 
upon its export from India to Great Britain, it being 
also alleged that silver retained its old purchasing power 
in India, which is an error. I ventured to call the atten- 
tion of the scientists to the prime importance of the 
competition of the United States upon a gold basis in 
bringing about the reduction in the price of wheat in 
Great Britain, and I remarked that such had been the 
progress in invention since the date when wheat sold for 
fifty shillings a quarter in Mark Lane, as to have made a 
return of thirty-four shillings a quarter in 1887 quite as 
profitable to the grower as the former price of fifty shil- 
lings. This statement raised almost a storm of execration 
about my ears, which found its expression in the London 
Times, whose editor subsequently declined to print the 
proofs which I subsequently submitted sustaining my 
statement. In the interval between 1873 and 1887, the 
self-binder had been perfected and attached to the reaper, 
thus rendering it possible to harvest an immense wheat crop 
which could not otherwise have been gathered. The ex- 
port of flour had to a considerable extent taken the place 
of the export of wheat, while the railway charges and the 
freight by steamer, due to the adoption of the Bessemer 
rail and the compound marine engine, had been excessive. 
In the interval between 1873 and 1887, we had also met 
all the difficulties and had surmounted them, which were 
connected with the restoration of a gold standard in 1879. 
Such had been the effect of the application of science and 
invention that the railway charge for fifteen hundred 
miles from Minnesota and Dakota to the seaboard had 
been reduced eleven shillings per quarter, — reduction on 



I02 TAXATION AND WORK, 

steamship charge five shillings, — the reduction in the 
cost of planting and reaping two shillings, the sum saved 
in milling and sacking three shillings, and the reduction 
in elevating and handling one shilling. In fact there had 
been a gain between f873 and 1887, which had been 
divided between the producer and the consumer, of 
twenty-two shillings per quarter of eight bushels of wheat. 
The average price of wheat in Mark Lane, for the years 
1870 to 1873 inclusive, had been fifty-four shillings and 
ninepence per quarter. Deduct twenty-two shillings paid 
in 1873, subsequently saved in production and transpor- 
tation, and there was left thirty-two shillings and nine- 
pence as the average return to the American farmer on 
the prices of 1870 and 1874. The price in 1887 was about 
thirty-four shillings, which left the American farmer a 
better result than fifty-four shillings and ninepence had 
yielded him from 1870 to 1873. 

This statement was bitterly contested, and it was denied 
that a return of thirty-four shillings would yield any 
profit to the American farmer in 1887. The Englishman 
could not believe it. 

Since that date, in 1887, there have been still further 
reductions in all these charges, while the price of wheat 
in Mark Lane for the present season has been thirty-six 
shillings per quarter. Wages are higher on the farms at 
the present time than they were in 1887 ; the cost of pro- 
duction and distribution is lower. 

I also made an analysis of the cost of the production of 
wheat in Rhenish Prussia, where the highest rate of wages 
paid the farm laborer was six dollars per month, the aver- 
age rate much less, but the cost of the wheat was eighty 
cents a bushel. The cost of the wheat on many of our 
Western farms at four times this rate of wages is less than 
one-half that sum, or forty cents. What influence has the 



TARIFF PRO TECTION DOES NO T RAISE WA GES, 1 03 

tariff or duty upon imports upon the product of agriculture 
of this country, except to obstruct exports, consideration 
being given to these potent influences of other kinds ? 

The number of persons, workingmen and working- 
women, and others whose home market rests wholly upon 
the demand for export, is larger than the total number of 
persons occupied in all the arts of which any part could 
under any conditions be imported from a foreign country ; 
the two bodies of working people together constituting 
but fifteen to seventeen per cent, of the whole number 
who are occupied for gain in all the work of this country, 
the proportion varying somewhat year by year. Is it not 
the free exchange of the products of the field, the farm, 
and the factory among the people of our land which is of 
prime importance in determining the abundance of the 
product, the rate of wages derived from that work, and 
the distribution of that product ? 

Those who fear a reduction of the duties as well as 
those who hope for a reduction, may well bear in mind 
that, after all has been said, the tariff system is only one 
of the minor and not one of the major forces affecting 
the condition of our country. I am the more careful to 
press this point, because it will render the solution of all 
our difficulties much easier when the true measure of the 
problem is fully comprehended. 



CHAPTER XVII. 

Protection Promotes War ; Free Trade Promotes 

Peace. 

By the admission of the most prominent advocates of 
the present system of high duties from i86i to 1867, and 
also by the admission of the Senators whose letters have 
been quoted, it has been proved that this method of ap- 
plying the protective idea is not based upon a principle. 

It is not, therefore, *' an admitted truth requiring no 
further proof," nor is it " a rule of action among human 
beings." A high-tariff system represents merely a policy 
of which the purpose is to give another direction to the 
common rule of action among human beings than men 
would adopt if not forced to do so by tariff taxation. 

The declared purpose of this policy is either to raise or 
to maintain the rate of wages above the rates prevailing 
in other countries, or to divert capital from the investments 
which would otherwise be chosen by its owners into arts 
which would be freely chosen were there no such policy 
of taxation. The complement or correlative of such laws 
are those of a precisely similar character which are called 
for by workmen for limiting the hours of labor and regu- 
lating methods of payment. All these acts are in a certain 
measure socialistic or even communistic in their very 
essence. 

Free Trade, on the other hand, requires no force ; it is 
what men engage in of their own motive and for the joint 
benefit or mutual benefit of both buyer and seller. It is true 

104 



PROTECTION PROMOTES WAR. |0$ 

to the definition of principle — it is '' an admitted truth 
which requires no further proof," that "■ the rule of action 
among human beings," who have risen above the stage of 
savagery, is to trade freely ; that is to say, to exchange pro- 
ducts with each other for mutual benefit. It does away with 
distribution by war, slavery, and force, substituting ex- 
change by mutual agreement for the profit of both buyer 
and seller. It is '' an admitted truth which requires no 
further proof," that this exchange of product for product is 
an exchange of service by which men help each other. Free 
Trade or commerce among men and nations tends to the 
maintenance of peace, order, and industry. Witness the re- 
lation of the Dominion of Canada with this country during 
the civil war. It fortunately happened that before the civil 
war a treaty of mutual reciprocity in trade had been nego- 
tiated which was not ended until after the struggle. Under 
these favorable conditions beneficial to both countries — 
such was the influence that, although every effort was 
made by the most capable agents of the States in rebellion 
to incite Canada to attack the North, not one single regi- 
ment was required to guard our northern frontier, and not 
one ship of war was required to be stationed before the 
dominating port of Halifax. One of the most potent ar- 
guments by which Chancellor Caprivi has lately carried 
the treaties of reciprocity between the German Empire 
with Austria, Italy, and other countries, is that when men 
exchange products with each other they may not fight. 
It is the first step of relief from the standing armies that 
are eating out the very heart of Europe. 

But it is true that there still are a few cranks in this 
country, some even in the Senate of the United States, 
who regard commerce as a sort of passive international 
war ; men seriously object to the import of what they call 
a flood of foreign luxuries, upon the ground that such an 



ibG TAXA TION AND WORJC, 

import is a warlike attack upon our domestic industry, re- 
gardless of the fact that the greater part of these imports 
consists of the necessaries or comforts of life, or of crude 
materials of foreign origin without which some branches 
of our domestic industry would be destroyed. 

With singular fatuity, these legislators are among the 
most prominent advocates and upholders of bounties and 
subsidies to lines of steamships connecting the United 
States with foreign countries ; their purpose being to help 
the United States inflict the injury upon them from which 
they assume to defend themselves, i. e.^ to flood other 
countries with our products ; that is to say, to flood Great 
Britain with our cotton and our grain, and to flood other 
nations with our manufactured goods and wares, while 
refusing to accept payment for our surplus products in 
articles which are of foreign production that we need in 
place of these exports. Surely what is sauce for the gan- 
der is also sauce for the goose. Yet these advocates of 
bounties are the very men who hiss at a reduction of our 
tariff, and who impute to those who try to promote com- 
merce without bounties a dishonest seeking after British 
gold. Let them pass, their light can easily be hidden un- 
der a bushel because it is so feeble. 

The fallacy which underlies this crude theory of trade 
is the same as the misconception which has led to the 
commercial wars of the last three centuries, — the false 
idea that a country profits only in its trade when it im- 
ports gold or silver in exchange for goods ; or that when 
it imports more goods than It exports it must be meeting 
with a loss. It is no longer worth while to waste time in deal- 
ing with such persons, because as fast as they die their 
places are taken by men of a broader type and of greater 
intelligence, and also because with them it is useless to 
discuss this question, as they have presented these falla- 



PROTECTION PROMOTES WAR, 10/ 

cies until they have become incapable of reasoning upon 
the basis of facts. 

Suffice it, while Protection by means of a high tariff has 
only been defended by its original advocates, as a tempora- 
ry expedient or policy of which Free Trade is the ultimate 
end, on the other hand Free Trade is founded upon a prin- 
ciple so universal and so fully constituting a rule of action 
among human beings that it always has and always will 
require force to prevent its appHcation. 

A high tariff only finds its justification among those 
who regard international commerce as a state of war, while 
Free Trade is sustained by its advocates because it pro- 
motes peace, order, and industry, good-will and plenty 
among all the nations of the world. 

Free Trade may be especially desired in that country in 
which science and invention applied to the greatest 
natural resources have developed the largest product at 
the lowest cost from which the highest rates of wages are 
derived. That is the condition of this country. Our 
selfish interest is in Free Trade because we should gain the 
most in commerce whatever tariffs other nations might 
oppress themselves with. 

It is this aspect of the case that lifts the discussion 
above one of mere profit and loss, and which raises it to 
the highest plane in ethics and in morals. 

While the intentions of the advocates of what is mis- 
called Protection, but which is in fact privation, are doubt- 
less good, they are of the same kind as the intention with 
which the road to Sheol is said to be paved, and in their 
appHcation they have almost made a Sheol of the civilized 
world for about four centuries. 

It would perhaps be difficult to discriminate between 
the wars which have been conducted in the name of reli- 
gion and those which have ensued from the attempts to 



loS TAXATION AND WORlC, 

restrict commerce. The religious wars (God save the 
mark!) of France and Spain, drove the Moors and the 
Moriscoes with their arts and literature into Africa and 
the Huguenots and Flemings to England, as the persecu- 
tion of the Jews is now driving the traders and bankers 
of Russia from her soil, thereby turning what might have 
been only the ill-effects of a short crop into a famine. 

From the time when Columbus discovered the West 
Indies, or when Amerigo Vespucci discovered America, 
down to the present date, nearly every war has originated 
or has been conducted for the purpose of preventing 
one nation sharing with another in the benefits of com- 
merce. 

The efforts of France and Great Britain, through the 
Berlin decrees of Napoleon and the Orders in Council, to 
deprive each other of the benefits of commerce, first com- 
pelled Napoleon to sell Louisiana to this country, thus 
transferring to us a territory which, stretching from the 
Gulf of Mexico to the borders of Canada, will presently be 
the dwelling-place of a greater people than will occupy 
either Great Britain or France ; a part of whose commerce 
through the Sault St. Marie Canal that unites the great 
lakes even now exceeds the trafific of all Europe with the 
East through the Suez Canal. 

The end of all these wars of a single century since the 
French Revolution of 1793 has been that France has been 
exhausted in her efforts to depose the Bourbons and the 
Napoleonic dynasty, varying her efforts to govern herself 
by futile attempts to prevent the union of the people of 
Germany and Italy. 

The several nations of the world, mainly European 
nations, whose debts are recorded, are now burdened with 
a national debt, of which the aggregate amount is $26,- 
621,222,135 net, mostly incurred for the conduct of wars 



PkO TECTION PROMO TES WAR, I OQ 

undertaken or continued mainly for the restriction of 
commerce. This debt is increasing. 

In the effort to prevent commerce among about twenty 
separate States occupying the continent of Europe, of 
which the area, omitting the frozen regions of Europe in 
the one case and Alaska in the other, is about the same 
as that of the United States, taxes are raised at the tariff 
barriers amounting to about $700,000,000, while armies 
numbering over 3,000,000 men in active service are kept in 
camp and barracks at a cost, with navies added, of about 
$1,000,000,000. As the result of this system, great areas 
of most fertile land in Eastern Europe are lying waste ; 
Russia is famine-stricken ; large districts in Italy are 
devastated by the pellagra^ a loathsome disease due to 
the want of adequate nutrition ; the people of Germany 
are distinctly under-fed in many parts, while all Europe is 
dependent in part upon us for food. 

This whole waste of war and this whole condition of 
abject want are based upon and caused by the same stu- 
pendous blunder upon which the McKinley tariff act has 
been promoted, enacted, and is now sustained, to wit : 

That international commerce is a state of passive war, 
and that in the exchange of products what one nation gains 
another must lose. 

It is hard to maintain a judicial frame of mind in dealing 
with such pagan conceptions which belong to an age when 
men were just emerging from what John Fiske describes as 
the higher stage of barbarism that precedes civilization. 

It may not be that this error will be removed by any 
process of reasoning, or by any mere demonstration of the 
facts ; the remedy has come from the profound distrust 
of the very misconceptions on which this whole series of 
arguments and acts, culminating in the McKinley act, are 
but the logical development. 



no TAXATION AND WORK. 

The intelligence of the country has at length condemned 
the whole policy, and it now demands to be governed in 
its legislation by those who represent the principle of Free 
Trade, which is founded upon the conception of mutual 
service, under the guidance of men who will put principle 
above policy in the conduct of the public duties with 
which they have been or may again be charged. 

On the other hand, in support of the statement which 
has already been made, that the effect even of a very high 
tariff system has been exaggerated, one comparison in 
figures may be serviceable. The Statesman s Year Book^ 
for 1 89 1, gives the customary statements of the imports 
and exports of all the European States, the colonies 
and dependencies of Great Britain, and the nations or 
States of North and South America. Disregarding frac- 
tions, the exports of Great Britain and her colonies and 
dependencies comes to six thousand million dollars 
($6,000,000,000), or what we would call six billions ; 
the sum of the imports and exports of all the other 
European States is eight thousand million dollars ($8,000- 
000,000), or eight billions ; the sum of the imports and 
exports of the South American and Central American 
States makes thirteen hundred million dollars ($1,300,000,- 
000) ; of the United States seventeen hundred million 
dollars ($1,700,000,000) — total three billions. The aggre- 
gate of the international commerce of all the countries, 
nations, or states in regard to which the facts can be 
ascertained, is seventeen thousand million dollars ($17,000,- 
000,000), or seventeen billions. The product of the United 
States is computed at twelve thousand five hundred 
million dollars, of which perhaps five hundred million 
dollars' worth may be consumed upon the farms or by 
those who consume the goods which they produce them- 
selves. The rest is exchanged, it is all bought and sold. 



PROTECTIOI^ PROMOTES WAR. HI 

A single transaction or one exchange of this product, 
therefore, corresponds for purposes of comparison to the 
figures of the import and export in international com- 
merce. Our domestic transactions on a single exchange 
come to twenty-four thousand million dollars ($24,000,- 
000,000), or twenty-four billions. Our export and import 
amounted to seventeen hundred million dollars ($1,700,- 
000,000), therefore constituting on single transactions a 
fraction over seven per cent, of our commerce, again 
bringing into conspicuous notice the fact that the domestic 
commerce only of the people of this country exceeds the 
sum of all the international commerce of all the nations 
of the earth of which we have any record. 

Again, it may be remarked that the sum of the railway 
charge for carrying the freight only over the railways of 
the United States now amounts annually to a sum but little 
less than the volume of our exports and considerably 
exceeding the value of our imports from foreign countries. 

It is difficult to compute the measure of the free com- 
merce of the people of the United States who constitute 
a more numerous body occupying a wider area, than were 
ever before permitted to enjoy the benefit of absolute Free 
Trade. 

The sum of our exports and imports combined comes 
to about twenty-eight dollars per head, our national pro- 
duct is not far from two hundred dollars' worth per head, 
of which a single exchange would represent purchases and 
sales to the amount of four hundred dollars each, or nearly 
fifteen times the volume of foreign traffic. But each 
element in our product is dealt in many times, converted 
and re-converted until it is ready for consumption, so that 
the exchange of products and services among our own 
people cannot be less than three times the first value of 
our annual product, and that would bring the sum of our 



112 TAXATION AND WORK. 

domestic transactions to the incomprehensible total of 
$40,000,000,000 or what we call forty billions of dollars 
in this present year. 

Yet there are those among us who would debase our 
standard of value and by the free coinage of silver dollars 
under present acts of legal tender would endanger this 
whole traffic. The tax which would be put upon the work 
of this people by substituting a dollar which is only worth 
sixty-eight cents after it is melted, in place of a dollar 
which is worth after it is melted as much as it is in the 
coin — one hundred cents — would be so disastrous as to 
put the McKinley act out of sight and out of mind. 



CHAPTER XVIII. 
Does Tariff Protection Promote Liberty? 

It may be asked why the matter of the tariff should at 
the present time be a cause of disruption of existing 
parties and be tending toward a division and reconstruc- 
tion of parties on new lines ? 

The reason is that men of both existing parties have 
combined to defeat the effort to protect the little petty 
product of the silver mines by paying for it more than it 
is worth, and are now ready to combine to stop the effort 
to give bounties to the producers of wool and pig-iron. 

This latter effort will be brought about by a combination 
of the representatives of the States whose products de- 
pend on the sale of the surplus for export with the repre- 
sentatives of States that will no longer submit to taxation 
on the materials which are necessary in their manufact- 
ures. It now remains to develop the distinction which I 
have made in the relative effect of duties upon imports, 
upon our exports. 

It would be judicious for the advocates of a reform of 
the tariff to admit that when the so-called protective duty 
has been imposed for a sufficient length of time upon any 
article of foreign origin, for the production of which we 
possess equal advantages in this country as compared to 
other countries, a stimulus may be given to that specific 
branch of industry and it may be subjected to such urgent 
domestic competition as to cause a rapid reduction in the 

"3 



114 TAXATION AND WORK. 

price of that article. That is the reason why many 
branches of industry which have been subjected to the 
unwholesome stimulus of a high tariff have been, on the 
whole, the cause of more loss to the investors than a source 
of profit. The worst kind of competition to which a 
skilful manufacturer can be subjected, is the forced com- 
petition of people who are not capable of conducting the 
business but who are induced to go into it by a protective 
bounty or preference. 

Yet the only ground on which this system is justified 
is that which has been presented in the recent tariff cases 
brought before the Supreme Court. The law officers of 
the government justified not only the protective system 
but direct bounties to the sugar-planters upon the ground 
that the power vested in Congress to enact such a measure 
was ample and complete under the general provision of 
the Constitution, that Congress may legislate '' for the 
general welfare." While it is true that the court did not 
render any decision directly affecting the bounties to the 
sugar-planters, its decision on the whole sustained the 
ground presented by the law officers of the government. 

That argument was in these terms in the briefs of the 
Attorney- and Solicitor-Generals who represent the present 
administration : 

' ' The sugar-bounty clause was for the purpose of encouraging the produc- 
tion of raw sugar in this country." 

" It may be conceded that the bounty must be paid out of the Treasury 
of the United States from funds raised by taxation, and therefore that, 
unless Congress has power to levy a tax for the purpose of paying the bounty, 
an appropriation for a bounty is beyond its power." 

' * Congress has power therefore to levy duties for the purpose of providing 
for the general welfare of the United States. It has been held in a number 
of cases, upon which the appellants' counsel rely, that taxation must be for 
a public purpose, and therefore that, where it is proposed by a municipal 
corporation to pay money or lend credit to a private individual or company 



DOES TARIFF PROTECTION PROMOTE LIBERTY? 115 

as an inducement to the construction of works within the limits of the 
municipal corporation, the remote consequences of benefit to the people of 
that corporation are not sufficient to make the purpose of the donation a 
public one, and laws authorizing the same are void." 

After quoting the cases cited against them, the law 
officers of the government then proceed with their argu- 
ment in the following terms : 

" The foregoing do not include all the cases on the subject, but they are 
sufficient to show the principle which the appellants here invoke to invalidate 
the bounty clause under consideration. We respectfully submit that they 
have no application in this controversy. They are all of them cases of 
municipal taxation which must be for public municipal purposes. It is 
obvious that the establishment of a particular industry in one place by a 
bonus to specified private individuals is a very different object for taxation 
than the encouragement by the national government of a widespread industry 
in many quarters of the Union for national purposes, with a view to diversify- 
ing the industries of the country and making it independent of other 
countries for necessities." 

" The principle was laid down in the case of Lowell ?yj'. Boston, supra, 
that a purpose w^as not a public purpose because, by affecting the private 
interests of a great many individuals, it would ultimately affect the public 
weal. With respect to municipalities and States that can have no interna- 
tional relations, this is undoubtedly true, but the subject assumes a very 
different aspect when treated from the standpoint of the collective industries 
of a nation in competition with and in relation to the industries of other 
nations." 

' ' Such national action is required to offset the encouragement of the same 
industry in other countries, lest thereby we be made altogether dependent 
for the supply of a necessity upon countries thus far removed." 

" The Second Act of the first Congress of the United States, approved 
July 4, 1789, was an act imposing duties, which expressly recited its purpose 
to be the protection and encouragement of manufactures. The recital is as 
follows : 

*' ' Sec. I. Whereas it is necessary for the support of government, for the 
discharge of the debts of the United States, and the encouragement and 
protection of manufactures, that duties be laid upon goods, wares, and mer- 
chandise imported, be it enacted, etc. (I Stats., 24).* 

" The principle thus established necessarily justifies bounties, for, in the 
beginning of the operation of a protective tariff the amount of duty levied 



Il6 TAXATION AND WORK. 

is a bounty to the domestic manufacturer, and it is with a view to such a 
benefit for him that it is levied. The sugar duties have always had the 
effect of a bounty to domestic sugar producers. . . • 

" The question of the validity of bounties is thus as old as that of the 
protective tariff, and has been answered in the same way by constant legisla- 
tive and executive action, in accordance with the views of that ablest of 
statesmen and jurists who penned the Report on Manufactures. . . . 

" If a century's construction of the Constitution by Congress is binding 
on the courts, then the question of the power to tax for a bounty to particu- 
lar industries is no longer an open one. . 

" A course of legislation and an acquiescence of the people as old as the 
nation itself has sanctioned both direct and indirect bounties for the encour- 
agement of those industries which are closely allied with national growth 
and national independence, as a public purpose and within the power of 
Congress. . . • 

"We have been discussing heretofore the validity of the bounty features of 
the sugar clause on the theory that provision of this sort was for the general 
welfare. There is another ground upon which it can be supported. All the 
authorities agree that the government may recognize a moral obligation to 
any class of citizens by direct appropriation, though the claim is not based on 
strictly legal grounds. . . . 

" Here was a case where citizens, by reason of heavy sugar duties which 
had existed for many years, had been induced to make large investments in 
the plant required for the production of sugars ; and now it was proposed by 
Congress to remove the duties because the revenue which they produced was 
more than sufficient for the use of the Government. The removal of duties 
would absolutely destroy fifty or sixty million dollars' worth of property in- 
vested in this industry and protected by the duties. To enable persons whose 
property would be thus injuriously affected to prepare for the change, the 
Government was under a moral obligation to reimburse them for^ their loss 
or permit them by a bounty to continue the business until such time as the 
business might be self-sustaining." 

It will be observed that, so far as the Supreme Court 
sustained this construction of the powers of the National 
Congress, it held that the principle laid down by Justice 
Miller in Loan Association vs. Topeka, which I have pre- 
viously cited, does not govern. 

The principle was that " To lay the hand of the Govern- 
ment on the property of the citizen, and with the other 



DOES TARIFF PROTECTION PROMOTE LIBERTY? WJ 

bestow it upon favored individuals to aid private enter- 
prises is none the less robbery because it is done under 
the forms of law and is called taxation." 

In defence of the McKinley act the law officers of the 
present administration sustained the right of Congress to 
commit this robbery under the forms of law, but the 
court did not give a decision upon that branch of the case. 
That issue may be raised directly at some future time. 

It follows of necessity that, under the pretext of Pro- 
tection, any and all persons in the United States may be 
taxed by the Congress of the United States for the bene- 
fit of any single class of persons that any Congress may 
select for a bounty. 

If this position is sustained when the direct question 
of a bounty is adjudicated, it will follow that the legis- 
lative powers of the Congress of the United States may 
be misused without limit. Any tax to support any 
undertaking which a temporary majority of Congress 
may declare to be for the common welfare must be 
held to be for a public purpose, and so far as the Court 
has yet passed upon this claim, it has declared itself 
to be no longer a co-ordinate branch of the government, 
and that after such bounty has been paid for a certain 
period the recipients secure a vested right in the proceeds 
of taxation which the Supreme Court is powerless to 
abate. 

It would also appear that the powers of the Congress of 
the United States are supreme — even greater than those 
of the Parliament of Great Britain in spite of the assumed 
restrictions of our written Constitution. 

This renders the discussion of the tariff system as a 
matter of principle yet more imperative upon the people 
of this country, for the reason that where Protection 
begins revenue ends. That is to say, if a tax is levied 



Il8 TAXATION AND WORK. 

Upon a foreign import that so raises the cost of that im- 
port to the consumer as to make it expedient for him or 
any one else to undertake the manufacture of a domestic 
product of like kind, — then, as a matter of course, the 
import of that article ceases, and the revenue which had 
been derived from that import ends. 

Now it will be observed that the so-called principle of 
" Protection with incidental Revenue," and the effect of 
the McKinley act, which is based upon that idea, is to 
remove the duties upon imports of articles that cannot in 
the judgment of Congress be produced in the United 
States at equal advantage with other countries. 

On the other hand, the so-called principle and the pur- 
pose of the McKinley act is to put the rate of duty so 
high that everything which, in the judgment of Congress, 
can be produced in this country shall be manufactured 
here, so as to stop the import of foreign goods of like 
kind. It follows of necessity that if the double purpose 
of this act could be carried into effect, all revenues from 
duties upon imports would cease, and that would render 
a resort to a direct tax for the support of the Government 
an absolute necessity. 

This policy is therefore based upon the idea that the 
voters of this country will surely elect members of Con- 
gress who will be more competent than the voters them- 
selves to determine what branches of industry may be 
rightly and profitably undertaken in this country, and 
what may not. The fallacy of this conception was never 
more completely exhibited than by Daniel Webster when 
he defended Free Trade upon principle before he had 
become a mere advocate of the policy of Protection in his 
later years. 

In the great meeting held in Faneuil Hall in 1820 he 
used these words : 



DOES TARIFF PROTECTION PROMOTE LIBERTY? 1 19 

" It would hardly be contended that Congress possessed that sort of 
general power by which it might declare that particular occupations should 
be pursued in society, and that others should not. If such power belonged 
to any government in this country, it certainly did not belong to the gen- 
eral government. The question was, therefore, and he thought it a very 
serious question, whether, in laying duties under the authority to lay imposts, 
obviously given for the purpose of revenue, Congress can reasonably and 
fairly lose sight of those purposes entirely, and levy duties for other objects. 
Congress may tax the land, but it would be a strange proposition if Congress 
should be asked to lay a land tax for the direct purpose of withdrawing 
capital from agriculture and sending those engaged in it to other pursuits. 
The power, however, exists in the one case as much as in the other. It is 
not easy, it must be confessed, to draw a limit in such cases, and therefore, 
perhaps, it must be presumed in all cases that the power was exercised for 
the legal purpose, the collection of revenue, and that whatever other conse- 
quences ensued must be regarded as incidental and consequential to the 
exercise of the power. Still, it was a question very fit, in his judgment, to 
be considered by Congress, whether it was a fair and just exercise of power 
to elevate the incidental far above the primary object, or, to speak more 
properly, to pursue the latter in utter disregard of the former. 

"To individuals this policy is as injurious as it is to government. A 
system of artificial government protection leads the people to too much reli- 
ance on government. If left to their own choice of pursuits, they depend on 
their own skill and their own industry. But if government essentially affects 
their occupations by its systems of bounties or preferences, it is natural, 
when in distress, that they should call on the government for relief. Hence 
a perpetual contest carried on between the different interests of society. 
Agriculturists taxed to-day to sustain manufacturers ; commerce taxed 
to-morrow to sustain agriculture ; and then impositions, perhaps, on both 
manufactures and agriculture to support commerce. And when government 
has exhausted its invention in these modes of legislation, it finds the result 
less favorable than the original and natural state and course of things. He 
could hardly conceive of anything worse than a policy which should place 
the great interests of this country in hostility to one another — a policy which 
should keep them in constant conflict and bring them every year to fight 
their battles in the committee rooms of the House of Representatives in 
Washington." 

It IS manifest that even though Webster was the great 
defender of the Constitution and the representative of a 
party that carried its conception of the Federal power to 



I20 TAXATION AND WORK. 

an extreme, even he never dreamed of handing over the 
supreme power of Congress to the domination of the 
representatives of three petty branches of industry, such 
as Silver, Pig-iron, and Wool, by whom the Government 
has of late been controlled and in whose administration 
of power no man in the whole country possesses any 
rights of property which a Congress so dominated and 
controlled is bound to respect. 

The reaction has come, and it will very soon appear 
that this is a democratic country whose legislation is to 
be governed by the people for the people, and that no 
tax shall be levied which the Government does not receive 
and does not also retain for the public service only. 

It may now be expedient to deal with and to define the 
principle of Free Trade, construing words as they are 
given in the dictionary. Free Trade is but a synonym 
for Liberty. Liberty is defined as the state of a free 
man. In support of this proposition we may cite a defi- 
nition of Liberty given in one of the highest courts of 
our land by one of our greatest jurists. 

In People vs. Gilson, N. Y. Reports, Vol. 109, p. 389, 
1888, Judge Peckham gave a broad and lucid construction 
to the word liberty in deciding adversely upon a statute 
by which the Legislature of New York had attempted to 
interfere with the freedom of trade among its own citizens. 

The learned Judge ruled that : 

" The term liberty as used in the Constitution is not dwarfed into mere 
freedom from physical restraint of the person of the citizen as by incarcera- 
tion, but it is deemed to embrace the right of man to be free in the enjoy- 
ment of his faculties with which he has been endowed by the Creator, 
subject only to such restraints as are necessary to the common welfare. 
Liberty in its broad sense, as understood in this country, means not only the 
right to freedom from servitude, imprisonment, or restraint, but the right of 
one to use his faculties in all lawful ways, to live and work where he will, to 
earn his livelihood in any lawful calling, and to pursue any lawful trade or 
vocation." 



DOES TARIFF PROTECTION PROMOTE LIBERTY? 121 

In the application of this principle of liberty, we may 
now put in quotation marks the definitions which are 
either to be found in the dictionary or in the decisions of 
the highest courts of our land with the exception of the 
Supreme Court. 

A principle is *' a settled law or rule of action in human 
beings." The principle on which the nation is founded 
is that of Liberty. The Constitution assures to every 
citizen the right of '' life, liberty, and the pursuit of happi- 
ness." Liberty is '* the state of a free man." To be free 
is to be " rid of that which confines, limits, embarrasses, 
oppresses, and the like." Liberty in its broad sense is the 
right of one to use his faculties in all lawful ways, to live 
and work where he will, to earn his livelihood in any 
lawful calling, and to pursue any lawful trade or vocation. 
Trade is *' the act or business of exchanging commodities 
by barter or of buying and selling for money." Free 
Trade is therefore " the buying and selling of commodi- 
ties " without being subject to acts which " confine, limit, 
embarrass, or oppress." 

In the exercise of Free Trade the citizen is entitled to 
Protection which is " preservation from loss, injury or an- 
noyance " in his undertaking to " earn his livelihood in 
any lawful calling and to pursue any lawful vocation." 

The citizen cannot be deprived of the right to Free 
Trade by any act which " limits, embarrasses or oppresses 
him," or by " taxation, except for a public purpose," the 
Supreme Court when dealing directly with the rights of 
citizens having rendered a decision that " to lay the hand 
of the government on the property of the citizen and 
with the other bestow it upon favored individuals to aid 
private enterprises, is none the less robbery because it is 
done under the forms of law and is called taxation." 

The levy of a " duty " upon foreign imports is to im- 



122 TAXATION AND WORK, 

pose a " tax, toll, impost, or custom." A tax is a " rate or 
sum of money assessed on the person or the property of a 
citizen by government for the use of the nation or State " 
which cannot lawfully be used for any private purpose. 

The effect of a tariff for what is miscalled " Protection '* 
is to " limit, embarrass, and oppress " the citizen in the 
pursuit of his lawful " trade or vocation " for the purpose 
of '' laying the hand of the government on the property 
of the citizen, and with the other bestow it on private in- 
dividuals ; " or, in other words to levy a tax which is not 
for the use of the government. 

The policy of Protection under such acts as the Mc- 
Kinley act, when rightly defined is, therefore, a policy of 
privation. Free Trade qualified by the taxation of im- 
ports in order to raise a revenue for public purposes only, 
is the right of every citizen. 

It may therefore be the duty of every citizen, without 
distinction of party, to vote only for members of Con- 
gress who will so adjust the duties upon imports that all 
taxes that the people pay the government shall receive. 



CHAPTER XIX. 

Progressive Reduction of Duties. 

It has been demonstrated that if it were possible to 
carry the purposes of the McKinley act into effect by im- 
porting free of duty, all the things that we cannot produce 
to advantage, and by putting a prohibitive duty upon all 
articles, which, in the judgment of any Congress could be 
produced to advantage in this country, the result of that 
policy would correspond to the result that would be at- 
tained by the application of what is called " British Free 
Trade" to the commerce of the United States — namely, 
all revenue would cease under such a tarifT, except on 
liquors and tobacco, our revenue would be derived mainly 
from our excise on liquors and tobacco, supplemented by 
an income tax, or by direct taxation. The fact is, however, 
that the purpose of the McKinley act cannot be reahzed, 
and the conception upon which it is based of " Protection 
with incidental Revenue " is incapable of application to 
our commerce. 

We have been saved from the complete destruction of 
our commerce except in sugar and some other relatively 
unimportant articles with a consequent prohibition of the 
greater part of our exports, by the incapacity of the 
dominating party to put their intention into effective 
action. 

It already appears that import of many articles which 
it was the intention of the McKinley act to exclude, is 

123 



124 TAXA TION AND WORK. 

increasing at the present time. Nearly one half — 48 
per cent. — of the woollen and worsted fabrics which are 
consumed by the people of the United States are made 
either in this or some other country from wools grown in 
a foreign country. It may be asserted without fear of 
disproof, that the people of the United States are pro- 
portionately clothed in larger measure with the products 
of foreign countries than they were one hundred years 
ago when Alexander Hamilton bore testimony to the 
common wear of domestic fabrics by the people of that 
period. 

Again, it does not appear that the futile attempt to 
establish the manufacture of tin-plates in this country 
has yet been met by any measure of production even 
equal to the increase of the requirements of the present 
year as compared to other years ; nor can any evidence 
be obtained that measures are in progress for beginning 
with the sheet metal and ending with the tin-plate that 
will, within any computable period, assure any considera- 
ble supply of tinned iron or steel wholly of domestic 
manufacture. 

The evidence has also been submitted that so far as the 
future course of reform may be predicated upon the past, 
the Congress which is to be elected in November 1892, to 
meet in its first session, December 1893, will meet the 
following conditions : — Applications for pensions under 
the existing laws will have been so far examined and 
audited that the need of an appropriation to meet the 
first payments of pensions granted will have substantially 
ceased. The payment of the annual pension roll will 
then be less than one hundred million dollars and will be 
subject to rapid reduction under existing acts. 

On the other hand, the revenue which will then be 
derived from liquors and tobacco under existing laws will 



PROGRESSIVE RED UCTION OF D UTIES. 1 2 5 

be very considerably more than the appropriation which 
will be made by the present Congress, except pensions, 
and will be more than sufficient to meet all the expendi- 
tures which will be authorized under such appropriations 
for all purposes except pensions. 

It will follow that there will be at that time an excess 
of revenue from liquors and tobacco above all other ex- 
penditures which may be applied to the pensions. This 
excess of revenue from liquors and tobacco will certainly 
cover the few first payments of applicants which may not 
then have been passed upon, and it will be very sure to 
yield also a surplus to be applied to the pension roll it- 
self. Therefore the legislation of the Congress about to 
be chosen will be limited to providing less than one hun- 
dred million dollars from duties upon all imports, except 
liquors and tobacco. 

We may now revert to the official statement of the rev- 
enue from duties which was given in detail in the third 
chapter of this series of treatises. From that we may 
then undertake to select a Hst of the imports to be sub- 
ject for taxation, from which an ample revenue may be 
derived without any undue interference with the freely 
chosen pursuits of the people. In making this selection 
one may rightly revert to the rule which was laid down 
by Sir Robert Peel in dealing with a similar condition 
which was given in Chapter VII., namely: 

"If we had to deal with a new society, in which those infinite and com- 
plicated interests which grow up under institutions like those in the midst of 
which we live, had found no existence, the true abstract principle would be 
' to buy in the cheapest market and to sell in the dearest,' And yet it is 
quite clear that it would be utterly impossible to apply that principle in a 
state of society such as that in which we live without a due consideration of 
the interests which have grown up under the protection of former laws. 

"While contending for the justice of the abstract principle, we may at 
the same time admit the necessity of applying it partially. I think that the 



126 TAXATION AND WORK. 

proper object is first to lay the foundation of good laws, to provide the way 
for gradual improvement which may thus be introduced without giving a 
shock to existing interests. If you do give a shock to those interests, you 
create prejudice against the principles themselves and only aggravate the 
distress. This is the principle on which we attempted to proceed in the 
preparation of the tariff." 

If we apply these considerations to our own case, it 
will appear that the direction of the investment of a large 
amount of capital has been very considerably changed by 
the long existence of a high tariff, but it has been proved 
that the duties on crude and on partly manufactured 
materials may all be removed without any injury, but on 
the contrary with actual benefit to the producers on iron 
and wool, while at the same time giving relief to manu- 
facturers who convert these materials into form for con- 
sumption. 

Again, it may be remarked, that there are certain 
articles taxed under the head of Class A, Food and Live 
Animals — such as fruits, including nuts upon which it 
may be wholly suitable to retain duties for revenue pur- 
poses only so long as it may be expedient to do so. 
Fruits and nuts are not necessaries of life, and if it is 
expedient to tax them for the payment of revenue one 
surely cannot object to that. They yield over four million 
dollars of revenue. All the rest of the taxes upon crude 
and partly manufactured materials, according to the 
figures of 1 89 1 may be removed, and yet at the rates of 
duties imposed in that year on Class D, comprising manu- 
factured articles ready for consumption, and Class E, 
articles of voluntary use and luxuries, with the four mil- 
lion dollars from fruit and nuts added the revenue would 
be one hundred and ten million dollars, which is in ex- 
cess of what will be required by at least twenty millions. 

It may, however, be remarked, that when the duties 



PROGRESSIVE REDUCTION OF DUTIES. \2'J 

upon the materials which enter into the processes of 
manufacturing textile fabrics and articles made of metal 
have been wholly removed, there may be and probably 
will be a considerable reduction in the import of the 
finished articles, in which crude iron, steel, and wool are 
component materials of chief value. We shall then excel 
many other nations in the production of nearly all the 
finished fabrics in which these materials are consumed of 
which we now import a very considerable part. There- 
fore, except for the increase of population, a falling off 
in the revenue from finished fabrics might be looked for. 
But, on the other hand, the increased prosperity which 
must ensue from the promotion of manufactures under 
such a policy, coupled with the very large increase in ex- 
ports which will ensue from the adoption of that policy 
must greatly increase the consumption of foreign as well 
as domestic fabrics which are not articles of necessary use, 
especially when the duties on foreign imports are reduced 
in proportion to the duties which have been taken from 
the materials. It follows, as a matter of course, that by 
the careful selection of manufactured articles and articles 
of voluntary use, luxuries, for revenue duties, etc., a rev- 
enue may be derived in ample measure to meet the 
requirements of that part of the pension roll for which 
no other provision is made. By maintaining the duties 
upon articles of luxury and voluntary use, covering 
mainly silks, l^ces, edgings, embroideries, artificial flowers, 
perfumery, cosmetics, etc., and the finer textile fabrics, 
chinaware, earthenware, which depend not upon utility or 
necessity for their use, but upon the fleeting fashion or 
fancy of each year, we may not only secure an ample 
revenue, but exercise the discretion and discrimination 
which Sir Robert Peel so wisely declared to be necessary 
in altering a system which has been so long in existence. 



128 TAXATION AND WORK, 

Of course it is not intended to propose to abate the 
duties upon the finer kinds of manufactured goods without 
due notice or by any single act. Such a policy would not 
be giving due consideration to the effect of a long-con- 
tinued high tariff. When a right method of reducing the 
tariff has been chosen, it is not important that the whole 
work should be accomplished in any one year, although 
it may be done by one act covering a provision for a pro- 
gressive reduction. 

It will be remembered that the change which was 
brought about under very similar conditions in Great 
Britain was entered upon in 1842 but was not ended until 

1853. 

A very large part of the machinery which is now in 
operation in this country upon fabrics that may be 
imported has been heavily increased in its cost relative 
to that of the competitors in manufacturing in other 
countries by the same system of duties. Due regard 
should be given to that fact, and if duties upon such 
fabrics are maintained at moderate or even high rates 
during the life of such machinery, which ranges from ten 
to fifteen years, no injustice would be done and no harm 
would come of any moment even to the consumer of the 
manufactured goods. Long before that period had elapsed 
it is probable that the duties on all of the finer fabrics, 
except those which are hand-made, would have become as 
totally inoperative as the duties now are on a large part 
of the textile fabrics of the coarser grades which we our- 
selves make. 

In other words, if the fear of revolutionary measures 
and extremely radical changes can be removed, there is 
absolutely no obstacle to an agreement on the part of 
moderate men, whatever may have been their opinions in 
respect to Protection and Free Trade, to the end that the 



PROGRESSIVE REDUCTION OF DUTIES, 1 29 

objective point which is common to both may be reached 
by a reasonable compromise, so that a tariff act may be 
passed which shall possess the elements of stability under 
which this strictly business question may be removed from 
the political arena. 

The advocates of a reform of the tariff make a grave 
error in demanding an instant abatement of duties and a 
radical revolution in our whole system of taxation upon 
the ground that because there is a duty upon a given article 
that might be imported it follows that the price of a 
domestic product of Hke kind will be maintained above 
what it would otherwise have been to the full extent of 
the duty. 

This delusion has been mainly promoted by the falla- 
cious expectation of a bounty or benefit which has been 
held out to farmers by the advocates of the McKinley 
tariff. Aside from such small exchanges of farm products 
as may be made with the Dominion of Canada, the pro- 
ducts of the farms of the United States which could be 
imported from a foreign country are so insignificant as 
not to constitute five per cent, of our total product in- 
cluding sugar and wool. 

The sole effect of duties upon the agricultural products 
of Canada as well as upon the iron ores and coal of the 
Maritime Provinces of the Dominion of Nova Scotia and 
New Brunswick is to deprive the inhabitants of Canada 
of their market, and thus to reduce their power to pur- 
chase our manufactures, of which they are as large con- 
sumers as they can afford to be. Being thus prevented 
from working their own mines, forests, and fields to the 
best advantage, their men customarily come over into the 
United States in the working season, competing without 
any protective duty upon them with our own working 
men, and thus to some extent depressing the rate of wages 



130 TAXATION AND WORK. 

here, as a rule returning with what they have earned to 
spend their wages in Canada in the support of their famiHes. 
In one direction the Canadians have helped to save some 
of the protected manufactures of this country from disas- 
ter ; the textile factory operatives are now in very large 
proportion French Canadians, as the workers in the Penn- 
sylvania iron and coal mines are Welsh, English, German, 
and Bohemians, or Slavs, commonly called Hungarians. 

If regard be given to the various schedules of the pres- 
ent tariff, it will appear that more than one-half the speci- 
fications yield so little revenue as not to pay the cost of 
collection, or very little more, while another very large 
portion of the specifications are inoperative because the 
advantages of this country in production at high rates of 
wages and low cost have substantially enabled us to pro- 
duce more than we can consume even of these dutiable 
articles. 

It may be held that these latter conclusions of the 
writer are inconsistent with the grounds of objection upon 
which the McKinley tariff has been condemned. 

In the subsequent chapters of this series these pos- 
sible objections and the true method of discrimina- 
tion in the imposition of taxes upon imports so as 
to promote domestic industry and protect American labor 
from any undue burden will be finally dealt with. 



CHAPTER XX. 

Cost of a High Tariff. 

In the debate upon the tax on tin-plates and on other 
occasions it has been urged by distinguished Senators 
that even if the effect of a duty were to raise the price for 
a time, yet when distributed, this tax would come to so 
small an amount on each tin utensil as not to be appre- 
ciable. In other words, the excess of price that has been 
paid during the last few years on tin-plates used in all the 
arts, and especially in canning, amounting to over sixty 
millioii dollars ($60,000,000) is 7iot^ in the judgment of 
these gentlemen, an appreciable burden ! Such an argu- 
ment displays the profound ignorance of him who presents 
it in regard to modern commerce, manufactures, and 
agriculture. 

The burden of a tax is to be measured, First, by the 
ratio which the tax bears to profits that might be made in 
any given occupation, were there no tax upon the mate- 
rials. Unless there is profit the industry will not be 
undertaken. 

Second, the burden of the tax must be measured or 
estimated by its ratio to the wages or labor-cost into 
which the tax material enters as a component material. 
The burden of the tax may apparently be very slight in 
ratio to the gross value of the product, and yet be very 
heavy in ratio to the labor-cost, yet heavier in ratio to 
profits. 

131 



132 TAXATION AND WORK, 

Let it be assumed, for instance, that the cost of canned 
fish, soups, meat, milk, or other food products is divided 
into separate items in somewhat customary proportions, 
such as govern the cost of other articles. The cost of 
packing and the cost of the package or can used in pre- 
serving food is large in ratio to the prime cost of the 
material, much of which would be wasted if it could not 
be so preserved. We will, however, assume that the cost 
of the food material which is to be canned or packed 
comes to one-half or 50 per cent, of the value of the final 
product. Next, that the labor in the canning factory may 
be estimated at twenty per cent. We will assume that 
the untaxed tin for the can would cost twelve per cent., 
and that the tax upon tin would come to ten per cent. 
We will assume that a net profit of eight per cent, on the 
work would cause the business to be established and as 
rapidly extended as the demand would warrant. These 
estimated proportions may be defined by lines. 

Materials ... 50 per cent. _ 

Labor . . . 20 " " _ 

Untaxed tin . . 12 " " — 

Tax on tin . . lo " " 



Profit 



100 



Whether this proportion would exactly fit the canning 
industry is immaterial. There are many examples of 
industry in which such would be the proportions. It will 
be remarked that while the tax is only ten per cent, upon 
the product, it is fifty per cent, upon the labor, and one 
hundred and twenty five per cent, upon the profit. 

Now let it be assumed that this apparently small tax 
were abated ; then the capitalist or employer could advance 
wages one half without changing the price ; or he could 



COST OF A mCH TARIFF. 1 33 

advance wages twenty-five per cent, and increase his own 
profits sixty-two and one half per cent. ; or, by making 
an extra discount of ten per cent, on his wholesale price, 
he could get a very much wider market, employ more 
workmen, and gain a greater aggregate profit at the same 
rate on each sale. • 

Yet more, it depends very often on a margin of much 
less than ten per cent, of profit whether a foreign market 
shall be supplied with very many classes of goods from 
this country or from other countries. In the matter of con- 
densed milk, for instance, Switzerland, with free sugar and 
free tin plates, has relatively an enormous foreign export 
trade where we have had a very small one, if any. The evil 
efTect of a small tax of this kind may be much greater 
than appears on the face of it. Let it be assumed that 
the cost of the production of the farm products which are 
to be canned or preserved cannot be reduced without 
great injury to the farmer or the gardener ; it must remain 
at fifty per cent, in ratio to the final or manufactured 
product in the cans. It may also be assumed that the 
cost of labor computed at twenty per cent, is as low as it 
can be put in comparison with other branches of industry. 
In other words, the cost of the materials and of the labor 
cannot be reduced below seventy per cent, of the valua- 
tion of the manufactured or canned product without 
great injury to both farmers and workmen. 

On the other hand, the imposition of a tax of ten per 
cent, on the tin-plate or some other material of foreign 
origin creates such a disparity in the cost of the finished 
product as compared to other countries as to forbid ex- 
port. Under these conditions let it be assumed that the 
home market becomes overstocked : there comes what is 
called over-production of canned provisions. No- large 
export trade can be established because other countries 



134 TAXATION AND WORK, 

supply canned goods which are put up in untaxed tin. 
Even let it be assumed that the foreign cost of the 
materials is the same as it is here, or fifty per cent., and that 
the labor cost is the same, or twenty per cent. ; let it also 
be assumed that the cost of the tin untaxed is the 
same, or twelve per cent., and that the margin of profit 
is substantially the same, or eight per cent., in other 
countries. 

Now, let it be assumed that the producer of the same 
article in this country does away with all profit and tries 
to export his product merely to get rid of his excess. The 
account stands as follows : 

Materials 50 

Labor 2o 

Untaxed tin , 12 

82 
Taxes on tin 10 

Total 92 without profit. 

The tax covers his whole possible profit and even more. 
There is an excess of cost as compared to the foreign 
competitor even without any profit, which forbids ex- 
port because the whole commerce of the world now 
turns upon a mere fraction. 

The difference of a cent a bushel of wheat will send an 
order away from Dakota to South America or India. Under 
such conditions when the tax more than equals the mar- 
gin of profit, the employer of labor in the canning or any 
other industry must either force the price of farm pro- 
ducts down, or he must cut down the wages, or the busi- 
ness must be reduced and adjusted to meet what the home 
market only will take at a profit. If there is no profit 
the business stops. This brings into conspicuous notice 



COST OF A HIGH TARIFF. 1 35 

the fact that the burden of taxation is measured by its 
ratio to the profit that might be made on untaxed ma- 
terials but which is often cut off by such taxes so as to 
prevent the estabhshment of that art within the Hmits of 
this country. Such a tax Hmits our export of the sur- 
plus which is not needed by the people of this country but 
is wanted by others, even in respect to articles of food 
for which the world is going hungry but cannot buy be- 
cause it cannot pay with goods. Russia has to-day no 
gold with which to pay for food, yet the people of 
Russia are starving for want of the food that we might 
supply if we could buy sheet iron free of tax or some 
of the other products of Russia that we want. 

When these considerations are applied to the estimate 
that I have put upon the true cost to the people of this 
country of the taxes which are now imposed upon 
crude or partly manufactured materials that might be im- 
ported from other countries, estimating that cost at a 
sum of money equal to about three hundred million dol- 
lars, it will be observed that in this mere estimate in 
money I have only begun to state the bad effect of that 
burden of taxation. 

For instance, while during the period of ten years that 
have lately elapsed, the price of crude iron or pig-iron has 
not been maintained in this country above the price in 
Great Britain and Germany to the full measure of the duty ; 
nevertheless, by a comparison of the prices of pig-iron, 
year by year, for a period of ten years, it has been con- 
clusively proved that the consumers of iron in this coun- 
try have paid on an average, year by year, $70,000,000 more 
for their supply of crude iron ($700,000,000 more in ten 
years) than for the same quantity that has been supplied to 
other consumers who buy iron from the works of Great 
Britain, Germany, and Belgium. During this period the 



136 TAXATION AND WORK, 

actual price of iron has been very much reduced, but In each 
year during the progress of this great reduction the cost 
of iron to consumers in the United States has been 
$70,000,000 in excess of the cost of the iron supphed to 
other nations. The disparity in the price of iron rails and 
iron in the bar or sheet is yet more, and the disparity in the 
price of steel in the form of ingots, rails, sheets, and bars 
is yet more. No exact computation can be made, but 
when it is alleged that the disparity or difference in the 
price or cost of iron and steel to this country has been 
one htuidred million dollars {%\oo, 000,000) per year for ten 
years, that affirmation cannot be disputed, and the more 
the figures of prices are studied the more certain it be- 
comes that the difference or disadvantage on our side has 
been greater. No one has yet ventured to deny or to 
attempt to disprove this statement. 

Now let this disparity — no matter whether it has been 
a profit of individuals, or merely an increase of cost with- 
out profit to the ironmasters — be considered in its ratio 
to profits. In a broad and general way one may estimate 
the cost of the material that enters into the heavier kinds 
of machinery at sixty per cent., and of the labor at twenty 
per cent. 

Then it appears that the disadvantage or higher cost of 
iron to the makers of heavy machinery, in the construc- 
tion of vessels and in many branches of work, is greater 
than the entire cost of labor in Great Britain, in the con- 
version of untaxed iron and steel into these same finished 
forms. In this view of the matter the reason becomes 
very plain why we cannot compete with British steamers 
upon the ocean. The imagination fails to conceive the 
effect of this disadvantage which is due to the disparity 
in the cost of iron and steel in depriving us of the oppor- 
tunity to supply the non-machine-using nations with what 



COST OF A HIGH TARIFF, 1 37 

they need in manufactured goods, and in depriving us of 
the opportunity to meet the increasing demands of Asia, 
Africa, South America, and Austraha, for machinery in all 
forms, for rails, engines, and cars, and in depriving us of 
any share in ocean transportation. I have stated that the 
exports and imports of all nations come to seventeen bill- 
ion dollars a year; our proportion of that international 
traffic is ten per cent. The magnitude of our domestic 
traffic has lately been demonstrated in an article in The 
Forum, by Edward P. North, in which he quotes from an 
address given at the Deep- Water Ways Convention, held 
last December in Detroit, by Mr. George H. Ely. This 
statement is that " about thirty-six million registered net 
tons of shipping passed the city of Detroit in the previous 
year during the two hundred and twenty-five days that 
the navigation of the great lakes was open." . . . 
" The aggregate tonnage entering and clearing from the 
ports of London and Liverpool during the entire year 
does not equal that passing Detroit in seven months, and 
that is a growing commerce." Why should not our 
foreign traffic be brought up to that of England ? 

Were the price of iron and steel the same in this country 
and Great Britain, as they would be were it not for the 
duty imposed by us, making due allowance for ocean 
transportation, it would be in fact immaterial whether the 
price of iron were $i6, or $20, or $25 a ton in either coun- 
try. We use nine million tons of iron. Our relative dis- 
advantage on the average for many years, let it be assumed, 
has been $7 per ton'. If there had been no duty, the 
price of iron in this country might have been higher by 
one half that difference, or $3.50; nevertheless, the price 
of iron to our consumers would have been the same as in 
Great Britain, and we should have shared the international 
commerce of the globe and the ocean transportation in a 



138 TAXATION AND WORK. 

measure that no one can determine, bringing in an advan- 
tage in comparison with which the sHghtly higher price 
of iron would have been a mere trifle. There would have 
been none of the great fluctuations, and so-called over- 
production such as now affects the iron industry. There 
would have been a uniformity and practical stability in 
prices, and as the cost of coal is rapidly rising in England 
and the supply of coal and iron ore is becoming relatively 
deficient, so the more urgent demand of this country upon 
the mines and works of England by advancing prices 
there would cause the opening of our mines and works so 
much the more rapidly. Our mines and works would be 
protected by putting up the prices of crude iron to British 
consumers, while developing our own resources even in 
more rapid measure than we now do. Then the true Pro- 
tection to our own domestic iron industry will be attained, 
because no one can compete with us on equal terms ; our 
wages will be higher and our cost less, because our ores 
and coal are more abundant, more easily worked, and with 
a less number of days' labor to the ton of iron than any- 
where else. Whatever nation dominates in coal and iron 
controls the commerce of the world. Even at the disad- 
vantage to which we have been subjected by the relatively 
higher price of iron and steel, we yet excel so much in the 
I application of labor, that we export locomotive engines, 
looms, and agricultural tools and implements. We have 
gained in foreign commerce in some directions, but we 
have lost heavily in others. The disparity or difference 
in price against us has become a greater disadvantage the 
lower the actual price is forced. A disparity caused by 
the tariff of $9 was a comparatively small matter when the 
price of iron ranged from $40 to $50 a ton, as it did a few 
years ago, as compared to the difference of a little under 
$7 now, when the price of iron is less than $20. We have 



COST OF A HIGH TARIFF, 1 39 

paid this excess of cost of iron, $70,000,000 average year 
by year, on all the metal that has been consumed in this 
country, sometimes, it is admitted, not to the full extent 
of the duty. But to the extent to which that duty has 
kept the price in this country higher than it would other- 
wise have been, and higher than it has been in foreign 
countries, it has cost us ten-fold any possible benefit to 
the producers of iron. 

Moreover, the obstruction to our demand upon the iron 
and coal deposits of Great Britain, Belgium, and Germany 
has doubtless tended to keep the price of iron still lower 
in Europe than it would have been had we been free to 
purchase our materials from the representatives of those 
works. We consume nearly forty per cent, of the world's 
total product of iron. We have the greatest purchasing 
power of any nation, and to the extent to which our pur- 
chases of iron from England have been obstructed, the 
purchasing power of England in respect to our grain and 
food has been diminished. To that extent the iron-mas- 
ters of England, in the absence of our demand, have sup- 
plied the machinists of Europe at lower cost of iron to 
them. That is to say, the machine-makers and the ship- 
builders of Europe have been protected by exemption 
from taxation on materials, while ours have been hindered 
in their industry, and our power to construct American 
ocean steam-ships has been destroyed. 

It has sometimes been held that when in consequence 
of our tax upon imports the price has been reduced in 
other countries on the articles which we still import, 
we have simply put the tax on the people of such other 
countries. There could not be a more mischievous error. 
To the extent that we keep down prices in other coun- 
tries by tariff obstructions, we diminish the power of pur- 
chase of that country in respect to our food, and when 



140 TAXATION AND WORK. 

our tariff tax has reduced the prices of iron and steel, 
wool, tin-plates, or some other crude materials abroad we 
have given the advantage to the foreign consumer of these 
crude materials over our own consumers. In this way we 
have invited the increasing quantity of imports of finished 
products at lessening cost by the very acts by which we 
have attempted to exclude them. Any tax imposed in 
this country on crude materials protects the foreign manu- 
facturer. 

I will not attempt to measure the effect of the disparity 
on anything but iron and steel. The demand of the 
world for tools, machinery, and other implements made 
of iron and steel is constantly increasing. It is far in ad- 
vance of the increase in population. If the price of these 
crude materials were the same in Europe and this country 
(aside from the freight charge to and from there, which rs 
trifling), then our ship-builders, machinists, stove-makers, 
and the like would enter into the world of commerce on 
substantially the same conditions and on even terms with 
their competitors in other countries whatever the actual 
price of iron might be. They are forbidden to-day by 
the relation which the tariff taxes bear to the profit that 
would induce the manufacture of goods for export. It has 
been held that if the tax is ten per cent, on the finished 
product — that is to say, if the tariff tax threatens a dis- 
parity between this country and another of ten or even 
five per cent., then the profit that under free conditions 
would have induced the undertaking of the work is for- 
bidden by the tax. 

Taxes, on the other hand, upon the finished products, 
especially upon articles which depend upon luxury, 
fashion, or fancy for their sale, may simply cost the con- 
sumer who chooses to buy them just the amount of the 
tax. A revenue tax upon finished products may there- 



COST OF A HIGH TARIFF, I4I 

fore be substantially consistent with the rule that all 
taxes that the people pay, the government shall receive, 
while a tax upon the crude or partly manufactured ma- 
terials is not consistent with this rule. The cost of these 
imported materials which enter into the processes of 
domestic manufacture prevents diversity of manufactures, 
limits production, prevents exports, and burdens com- 
merce at every point. The burden of such taxation may 
be tenfold what the government receives, and yet it may 
not yield even a private profit to any one ; witness 
the increase in the cost of woollen goods accompanied by 
a reduction in the price of protected wool. 

Having thus analyzed the disparity in the relative 
burden of tariff taxation, the general conclusions which 
may be derived from this series of treatises will be given 
in the final chapter. The subject treated in this chapter 
is the only branch of the tariff question that requires 
hard tliinking and close analysis in order to make it plain. 
Every person who has the slightest knowledge of com- 
merce is aware that by way of the application of modern 
machinery the maximum of production in any given line 
is very quickly attained, and this makes it almost sure 
that the representatives of some important product may 
or will overstock the home market in a very short time. 

Again, any one who is familiar with business knows 
how difficult it is to bring the production down again to 
a suitable point after the market has been overstocked, 
and how depressingly and how relatively grave is the 
effect upon prices of a very slight excess, which cannot be 
consumed and which cannot be exported. Keeping these 
facts in mind, it will be observed that in respect to grain 
and cotton, we are subject to a very large excess of pro- 
duct above any possible consumption within the limits of 
this country. While it is true that Europe must take our 



142 TAXATION AND WORK, 

food or starve, and while it is also true that foreign 
spindles must be supplied with American cotton at 
present ; yet to what extent, at what price, and how 
tapidly European countries can take from us these prod- 
ucts, depends not only upon their own urgent demand, 
but also on their control of the means of payment. So 
far as payment may be made in goods the trade may be 
prompt and reciprocal, but when we obstruct or refuse to 
take the goods with which we might be paid, the pur- 
chasers of our products must find a market for these 
good in other countries from which they may derive the 
money which is to be placed to our credit in London for 
payment. 

The farmers and cotton growers of this country have 
recently been trying to find out what is the matter with 
their markets, and they have demanded more money. 
The depression in the price of farm products and the 
difficulty in the sales of the excess lie at the bottom of 
this demand for more money, and have exposed us to the 
dangerous agitation of the silver question. What the 
farmers require is a more open and a wider market and a 
readier sale of the excess of their products, which they 
can only secure by removing the obstruction to the import 
of the means of payment with which the world is waiting 
to meet them. 

Again, our manufactures are subject to great fluctua- 
tions. Why ? Because their possible home market is 
very largely among the farmers, or among those who 
supply the farmers with tools and implements, or who 
move the products of the farm from the field to the con- 
sumer. More than one half of the domestic demand for 
the manufactures of this country rests upon the ability of 
the farmer to buy the goods ; the ability of the farmer to 
buy manufactured goods depends upon his ability to sell 



COST OF A HIGH TARIFF, 1 43 

his excess or surplus of products for export to foreign 
countries. Indirectly the stability of the market for all 
products depends upon the free export of our surplus. 

The revenue derived from the crude materials which are 
necessary in the processes of domestic industry has formed 
but a small part of the excess of our revenue, which has 
been applied to the purchase of our bonds long before 
their maturity. It could all be spared at the present time 
without the loss of revenue being felt in the slightest 
degree. I am of the profound conviction that the indi- 
rect injury to manufactures, agriculture, and commerce is 
fifty-fold as great by measure in mere money. That is to 
say, the revenue of about $14,000,000 which the govern- 
ment receives from taxes upon crude materials which are 
necessary in all processes of domestic industry may have 
cost us $700,000,000. 

In other words, I think that no one can deal with this 
tax in its ratio to profits, in its obstruction to exports, or 
in its pernicious effect in every direction, without reaching 
the conclusion that the cost of the revenue secured by 
the government upon wool, pig-iron, coal, ore, and a few 
other crude articles has been fifty-fold the amount of the 
revenue that the government has secured. This cost 
consists in privation of commerce, through the effect of 
this apparently petty tax, and in the disparity in the cost 
of domestic manufactures heretofore demonstrated. 

The total revenue derived from the articles classed as 
crude products necessary in our domestic manufactures 
in the last fiscal year was $14,000,000, chiefly from 
wool and other fibres, coal, and iron. The direct effect 
of this tax in maintaining the cost of the material 
of our manufactures above that of other countries I can- 
not put at less than the entire cost of the conduct of this 
government, including pensions, or over $300,000,000. 



144 TAXATION AND WORK, 

The indirect effect of this and other taxes upon the 
import of the products of other countries, which are 
their only means of payment for our products of agri- 
culture, cannot be computed. It deprives us of what 
might be the profits upon agriculture and commerce, 
which may come to three or four hundred million dollars 
more. Who can tell ? The evil can never be measured 
until it is removed. 

In a previous number the statement has been submitted 
of the depressing effect of similar taxes upon the domes- 
tic industry of Great Britain in 1842. Sir Robert Peel 
and those who supported him in the abatement of these 
petty taxes upon materials had little comprehension of 
the prosperity that would ensue as soon as they were 
removed. An income tax was twice levied for limited 
terms of three years each, to make up for the expected 
deficiency of revenue which it was assumed would ensue 
from the removal of duties upon crude materials. But 
the removal of this tax gave such an immense impetus to 
British agriculture, commerce, and manufactures alike, 
that in each instance the income tax became a surplus. 
The import of dutiable goods increased, and the revenue 
thereon increased more rapidly than the abatement had 
diminished it. The income tax itself also yielded a far 
greater sum than its promoters anticipated, because the 
incomes subject to tax were so rapidly developed by the 
increasing prosperity of the country. 

We shall never know in this country how much hurt 
has come to us from these malignant taxes on crude 
materials until one or two years after they have been 
removed. \ 



CHAPTER XXI. 

Development by Free Commerce. 

I MAY now give a summary of the propositions that 
have been submitted in this series of chapters on Taxation 
and Work, My experience covers fifty years of observa- 
tion, as boy and man, since I first became connected 
with the textile manufactures of this country. During 
thirty years since the publication of my first pamphlet 
upon Cheap Cotton by Free Labor ^ in 1861, I have given 
close study to all our industrial conditions. 

In that pamphlet and in two subsequent treatises upon 
the cotton fibre in 1863, I made a forecast of the future 
of this plant, which was then deemed as visionary as my 
forecast of the future fiscal policy of this country may 
now be regarded. I presented all the facts on which the 
conversion of the seed into oil, oil-cake fertilizers, and 
paper stock would be accomplished, showed the value of 
the stalk whenever success is attained in separating the 
fibre, and the possible value of the root for tanning or 
dyeing. 

I have been lately informed that the roots are now sold, 
and it is not improbable that my subsequent prediction 
will be fulfilled, that the fibre of the cotton plant will 
become a secondary product not equal in value to the 
other portions of the plant. 

I am now profoundly convinced that the system techni- 
cally known as Protection has reached its logical conclu- 
10 

145 



146 TAX A TION AND WORK, 

sion and destruction in the McKinley act, and that 
through a reconstruction of parties for the true consider- 
ation of financial questions, a system of national taxation 
will presently be adopted which will give just and equal 
protection to every branch of industry by exempting 
every crude or partly manufactured article from national 
taxation, and by reducing duties upon all other articles 
to a revenue basis, due regard being given to existing 
conditions in framing measures which will bring about this 
result within a short term of years. 

If a beginning should now be made by the exemption 
of materials used in domestic industry from all taxation, 
with an adjustment of duties, even at somewhat higher 
rates, on finished products which are ready for consump- 
tion, there would presently be little opposition to abating 
such duties by ten per cent, each year until they should 
be either wholly removed or reduced to a moderate and 
permanent revenue basis. 

My reasons for these conclusions are as follows : I hold 
it to be impossible for any person to come to any other 
conclusion who investigates the problem or the method 
by which I was myself convinced that the system of 
Protection in which I had been brought up was wrong. 
That method is to review the sequence of events since 
Hamilton framed a low-revenue tariff and advocated it 
upon the ground that it would give incidental protection 
to certain specific branches of industry which he then 
thought it might be desirable to promote more rapidly in 
this way, because the processes were either guarded in 
other countries by penal enactments for their protection, 
or were supported by bounties for the distinct purpose of 
keeping special control over them. 

I think that any impartial observer or student who will 
take Hamilton's list of manufactures, which were well 



DEVELOPMENT BY FREE COMMERCE. 1 47 

established a century since, and keeping that Hst in mind, 
will pass in review the present conditions of all our varied 
and diversified occupations, will reach certain conclusions, 
which are as follows : 

1st. All arts of any considerable importance in whose 
behalf tariff Protection is now invoked, were well estab- 
lished before the enactment of the first tariff of 1789, 
with the exception of the cotton manufacture which has 
been developed subsequently, notably by the invention 
of the American cotton gin. To this single important 
branch may be added some minor arts also due to sub- 
sequent inventions of which perhaps more have originated 
in this country than elsewhere. 

2d. The specific branches of industry in whose behalf 
the support of a tariff has been invoked, have been few 
in number even among the specific manufactures of the 
country. They consist mainly of the primary processes 
in the production of iron and steel, of textile manufac- 
tures, glass, and pottery, and some of the cruder products 
in what are known as chemicals. 

3d. These protected industries constitute a very small 
part even of what are classed as manufactures, and except 
when protected, not only by duties upon imports, but by 
patents like the Bessemer, or by the control of ore and 
coal mines in connection with the railways leading to 
them, they have produced neither higher wages nor 
greater profits than the more numerous and important 
branches of manufactures and metal working, to which 
no tariff protection could ever have been given, because 
no product of like kind could be imported. 

4th. The specially protected branches of industry have 
been subject to greater fluctuation than any others, — have 
become bankrupt more frequently, — are more uncertain in 
giving continuous employment than any others, — while 



148 TAXATION AND WORK. 

the labor is less American and more foreign, in many 
instances more systematically imported than is the case in 
any other kinds of work. 

5th. It has been conclusively proved by the experience 
of the Southern States that no special protection is re- 
quired even in the beginning of the work of mining iron 
ore or its conversion in the furnace or the iron works, or 
in the establishment of textile factories. It is also proved 
by our Southern experience that as soon as the interfer- 
ence of laws controlling the condition of laborers and the 
direction of their work had been done away with by the 
abolition of slavery, a very wide diversity of occupations 
established itself, which is rapidly bringing about the 
same general divisions in the occupations of the people 
that has also accompanied the settlement of every new 
territory and State in the West. 

6th. Nothing more need be said about the supremacy 
of this country in the production of at least ninety-five 
per cent, of the products of agriculture that we require, 
and which we produce at the highest rates of wages and 
the lowest cost. 

7th. Our supremacy in the matter of a supply of timber, 
except by comparison with Canada, is admitted. 

8th. No other iron-producing country can approach 
us in the facility with which the materials for the pro- 
duction of iron may be assembled at the furnace, nor 
in the quantities of ore and fuel lying upon or near 
the surface of the ground and in close proximity to each 
other, to the end that, by the measure of day's work, 
no other country can compete with us in the production 
of iron. 

9th. The processes known as the manufacturing and 
mechanic arts consist in the final conversion of the crude 
materials, which are derived from the field, the forest, and 



DEVELOPMENT BY FREE COMMERCE. 149 

the mine, into food, shelter, and clothing, all intermedi- 
ate processes being means to these ends. 

1 0th. The necessary supply of food is attained even in 
this country by the great body of the people, perhaps 
ninety per cent, of the whole number, at the cost of forty 
to fifty per cent, of the proceeds of their work. In 
Europe a much greater proportion of income is devoted 
to securing a supply of food, which on the continent is 
deficient in nutritive power. The most important primary 
elements in the production of food are phosphoric acid or 
phosphate of lime, and nitrogen. In respect to the first 
element, without which our grain and cotton crops might 
ere long be lessened, the recent discoveries of phosphates 
in Florida, added to those of South Carolina, give posi- 
tive assurance of an adequate supply for centuries to 
come, by far exceeding any other known supplies. In 
respect to nitrogen, we possess in the cow pea vine the 
renovator of the whole area of southern land that has 
been scathed by the slave system of labor: its benefits, as 
yet almost unknown, may yet be extended over the North 
and West. In the alfalfa, in clover, and many other reno- 
vating plants, we also possess advantages over almost 
every other section of the earth's surface yet occupied. 
What may yet be developed in South America waits for 
the establishment of safe government and sound finance. 

Being thus assured of a supply of food material in such 
excess that we are now " smothered in our own grease," 
it may be remarked that there is not a process in the 
mechanism of conversion, or in making the appliances 
of the household, which is not of necessity conducted in 
this country, or of which a similar product could in any 
considerable measure be imported from a foreign country. 
On the contrary, nearly every piece of machinery, and 
almost every household appliance for the conversion of 



I50 TAXATION AND WORK, 

food is relatively to other countries increased in its cost 
by the imposition of taxes upon the component materials. 

No article of any considerable importance is imported 
for the construction and equipment of the grist and flour 
mill, for the making of agricultural implements, for the 
meat-packing establishment, for the sugar refinery, for the 
brewery, for the bakery, for the furnishing of the domestic 
kitchen with cooking utensils, for the creamery or the 
cheese factory, for the incubator, or for the domestic hen- 
yard. The product of the latter in annual value is equal to 
the output of all our iron furnaces, double the value of the 
wool clip, and more than double the true value of the 
silver product. In short, in this food department, which 
is the most costly element in the price of life, we supply 
ourselves with at least double the product at half the cost 
as compared to every European country, from which prod- 
uct those who do the work derive the highest wages because 
the process of production is conducted at the lowest cost. 

More than forty per cent, of the people of this country are 
occupied in agriculture, and if to this force be added all 
the men and women who are occupied in providing the 
mechanism of the farmer and the appliances by which food 
material is prepared for consumption, more than one half 
the industry of this country is employed in providing the 
food of which the cost is about one half the price of life. 
It is deficiency in the supply of food and the consumption 
of armies that is the cause of the so-called pauper labor of 
Europe and the consequent high cost of production. 

The only way in which Protection can be given to this 
paramount branch of industry is by the exemption from 
taxation of the materials of which its mechanism, tools, 
and appliances are made. 

While agriculture cannot be protected by duties upon 
imports, its progress and prosperity may be greatly marred 



DEVELOPMENT BY FREE COMMERCE. 151 

by the obstruction to exports which of necessity follows 
the obstruction of duties upon the import of the goods 
with which our exports are paid for. 

nth. The shelter of the people of this country comes 
next in its relative importance ; with it may be treated the 
mechanism of distribution by rail, river, lake, and canal, 
by means of which food, fibres, timber, metal, and fabrics 
are placed where they are needed. 

It is impossible to give a complete measure of the 
manufacture of houses either in terms of money or terms 
of work. 

It may, however, be readily proved that the manufac- 
ture of buildings or the means of shelter for people, 
processes and goods, gives employment to a larger num- 
ber of workmen than are employed in all branches of 
domestic industry, of which any appreciable part could be 
imported from a foreign country. This proof may be 
given by an approximate estimate of the cost of providing 
house-room for the annual increase in our population. If 
we compute this increase at 2\ per cent., the increment in 
1893 will number 1,600,000. If we assign an average of 
one house or its equivalent to each family of five persons 
at a cost of, say, $600 for each house or apartment, then 
the measure in money of the manufacture of houses for 
the increase of population only will come to $192,000,000 
in 1893. The elements of a house are timber, stone, 
brick, glass, and metal, all of which are of necessity of do- 
mestic production in the class of houses with which we are 
dealing. The average earnings of the men who are occu- 
pied in the production of these elements of shelter do not 
exceed $500 per year. Deduct ten percent, for the higher 
services of contractors and bosses, and we have in round 
numbers 340,000 men, occupied in all the arts that are 
required to manufacture houses, even for the increase of 



152 TAXATION- AND WORK, 

population at only $600 per family of five. This is an art 
that cannot be protected by a duty upon the import of 
dwelling houses, but which is taxed at every point by 
duties upon the timber, metal, and glass which constitute 
the component materials of chief value. 

Each one must compute for himself the extent of the 
building trades by this computation of the least important 
branch considered in relation to quantity of material and 
labor consumed. Shelter in all its phases for men, 
processes, and goods cannot give occupation to less than 
2,000,000 to 2,500,000 persons, or about ten per cent, of all 
who are occupied for gain, none of whom can be protected 
by discrimination in framing revenue measures except by 
the exemption of the materials which they use from all 
taxes. 

The relative importance of the mechanism of distribu- 
tion comes next. We operate 170,000 miles of railway at 
substantially five men to a mile or more, making 850,000. 
We have constructed an average of 8,000 miles of railway 
per year since 1880. As nearly as it can be estimated, it 
takes about sixty men to build and equip a mile of railway 
in all branches of the work. This makes 480,000 to be 
added to the operating force, making 1,320,000 men in 
this one branch of the service. 

It has been already remarked that the traffic of the 
Sault St. Marie Canal now exceeds the traffic of the Suez 
Canal, from which every one may get some idea of the 
mechanism of our waterways. Add to these the con- 
structors of wagons and carriages, and it would seem at 
least probable that under the head of the mechanism of 
distribution we are in fact dealing with a body of men 
numbering at least three million, who can only be pro- 
tected by discrimination in framing revenue measures, by 
exempting all the materials which they use from taxation. 



DE VEL OP MEN T BY FREE COMMERCE. 1 5 3 

I2th. The third of the most important elements in the 
cost of living is Clothing. It is almost useless to attempt 
to compute numbers or the measure of value of this 
branch of occupation, because it is so much divided and 
so large a part is done in the household. The complete 
census data are not yet at our disposal. No reasonable 
conception can be reached as to what part of the fabrics 
or the clothing of the people could or would be imported 
until the component materials of the fabric and the 
machinery of the factory are exempt from taxation. At 
$25 per head, the consumption of textile fabrics by 65,- 
000,000 people would come to $1,625,000,000: which 
estimate may be warranted by extending the valuation of 
domestic textiles and imports so as to correspond to the 
average cost of conversion into clothing. This branch of 
industry is more affected by fashion and fancy than any 
other, and the consumption of clothing is more governed 
by these factors than the provision either for food or 
shelter. 

Sufifice it, that whatever may be the present necessity 
or expediency of continuing to raise a large revenue from 
duties on the finer textile fabrics, silks, embroideries, fine 
linens, laces, furs, ribbons, etc., etc., of which the greater 
portion of the imports consists, the true Protection of the 
manufacture of the more useful and staple goods of wool 
and cotton must consist in the exemption of their ma- 
terials from taxation. 

13th. It may be held that by giving consideration to 
the method of promoting domestic industry and protect- 
ing American labor by exemption from taxation, either 
on materials or on the processes of the work, a simple and 
effective system may be adopted, under which all the 
taxes that the people pay will be received by the Govern- 
ment. When that is accomplished, the correlative of 



154 TAXATION AND WORK. 

national taxation, reduced to terms of work, will be that 
of four to five per cent, of the labor of the people. It has 
been computed in a previous treatise at that rate doubled 
in consequence of the bad methods in which the national 
taxes are now levied. 

14th. It may be remarked that the views presented are 
inconsistent. It has been stated that, in the judgment of 
the writer, the protective system has not in the long run 
raised wages or increased profits, but rather the reverse. 
How then, it may be asked, can the cost of taxation for 
the support of Government and Pensions, estimated at 
$320,000,000 be doubled ? If this sum, which as received 
and expended, represents the work of over 500,000 
men for one year at $2 a day, or of a larger number 
at a lesser rate, and if the cost has been doubled by 
the mis-direction of taxation, what has become of the 
proceeds of the work of the second body of 500,000 
or more men, the proceeds of whose work the 
Government has not received? If it has neither gone 
into profits or wages, what has become of it ? 

My reply is Nothing. It has all been wasted. 

The attempt to attain Free Trade by developing a few 
special branches of industry by means of duties on corre- 
sponding imports at the cost of all other branches has 
failed ; the longer it has been pursued the less has it ac- 
complished its purpose. 

It has only subjected a few arts to an artificial stimulus, 
making more work necessary to attain the same product, 
that might have been attained by exchange in greater 
abundance. 

It has nowhere been held that the Protection of a high 
tariff does not make more work, but the object of science 
and invention is to save work and not to make it. 

The direct objections to this system are threefold: 



DEVELOPMENT BY FREE COMMERCE, 1 55 

1st. It makes more work, but It diminishes the general 
product, from the sale or exchange of which all profits and 
wages are alike derived. 

2d. It accustoms a great many people to depend upon 
the artificial support of the government instead of their 
own faculties, thus tending to disorder and corruption in 
legislation and in the civil service. 

3d. It establishes a disparity in the cost of the crude 
materials which enter into all the processes of our indus- 
try as compared to other manufacturing countries with 
which we compete, so that whatever may be the range of 
prices in any year, until the tariff becomes inoperative 
they are higher in this country ; therefore foreign manu- 
facturers are protected to the injury of our own. 

In conclusion, however, the final and paramount objec- 
tion to the obstruction to the import of the means of 
payment with which foreign nations liquidate their pur- 
chase of the excess of our products of agriculture, is that 
its evil effect upon the price of all our crops is something 
that cannot be computed, and which will only be capable 
of estimation when these obstructions are removed. 



In this series of short treatises I have endeavored to 
give the conclusions derived from a study of our condi- 
tions, in the hope that they may be conducive to a just 
settlement of problems which are vital to our future pros- 
perity. I have given what appear to be the facts, and I 
trust that in the future, as in the past, my computations 
will be accepted by the representatives of both sides in 
this question whatever value may be attributed to my 
own opinions. 

I regard it of great importance to the intelligent dis- 
cussion of this question that even those who are opposed 
to a high tariff on general principles should not be per- 



156 TAXATION AND WORJt, 

suaded into making exceptions, and into continuing the 
present system in part, with the idea that it may be profit- 
able and suitable for a time to do so. For instance, it is 
assumed by some of the representatives of some of the 
Southern States, in which iron ore and coal exist in great 
abundance, that the continuance for a time of the duties 
on ore and coal may enable them to establish the produc- 
tion of iron more surely. That is, in my judgment, an 
error. Under such an inducement, iron works will be 
established by those who are not masters of the business, 
and the domestic competition which will ensue will be 
more fatal to stability and success than any foreign com- 
petition could possibly be. 

I have said that the benefit, if any, that has been gained 
by the iron and steel producers during the last twenty 
years in excess of the ordinary gains in other business, has 
been due to the control of the patents and to the control 
of the deposits of ore and coal in combination with im- 
portant railway systems, and not to the duties on imports. 

Again, I believe it to be a very grave error to impute 
any excess in wealth or welfare in the Eastern States as 
compared to the Western and Southern to the protection 
of a high tariff. It would be impossible to give the statis- 
tical data that might be cited in support of my own 
views. Suffice it that I have followed the economic his- 
tory of the textile manufactures of the New England 
States for a very long period. I am very well assured in 
my own mind that New England would be richer, its peo- 
ple more prosperous, its textile manufactories developed 
on a sounder foundation, if there had never been any 
artificial stimulus given to them beyond a system of duties 
computed for revenue only, on the general direction of 
Hamilton's tariff. Even the manufacturing and mechani- 
cal industries of New England, which ever could be or 



DE VEL OP MEN T BY FREE COMMERCE, I ^ / 

ever have been subjected to foreign competition, except 
for the tariff taxes upon the crude materials which are 
necessary to them, are but few in number, and they con- 
stitute a very small portion of the specific branches of 
manufacturing and mechanical industry on which New 
England depends for the purchase of her food and other 
supplies from other parts of the country. The factory 
operative who has put his or her savings into one or more 
of the well managed savings-banks of New England since 
the enactment of the Morrill tariff of 1861, will have 
earned on the capital thus saved a larger increment of 
profit than has been attained by the average stockholder 
in the same factories in which such operatives have been 
employed. This is a matter capable of demonstration. 

Finally, I am almost inclined to take the position seri- 
ously which I made the subject of an address before the 
United Boards of Trade of New Hampshire, not many 
months since ; to wit, that the accumulated wealth of any 
community, and the welfare of its working people, as in- 
dicated by rates of wages and general conditions of wel- 
fare, will be assured in inverse proportion to the natural 
resources of the section in which such people dwell, and 
that their work will also be developed in greater measure, 
and greater prosperity will ensue, the less government 
interference is exerted to promote the investment of 
capital, or to influence the direction of the work, by tariff 
legislation. 

In other words, the less the gratuities of nature and the 
less the bounties secured by legislation, the more sterile 
the soil and the more necessary the work, the more will 
gumption, aptitude, intelligence, and thrift be developed 
in every part of the temperate zone, and the richer and 
vi\Q)X^ prosperous will the people become who dwell under 
these apparently adverse conditions. 



158 TAXATION AND WORIC, 

The stimulus of a moderately cold climate in which it 
is more comfortable to work in a factory than out-of- 
doors, gives a great advantage over the warmer or hot 
section of any country in the textile and many other 
arts. 



CHAPTER XXII. 
High Wages and Low Cost. 

It has been suggested to me that while basing my 
arguments upon the theory that in all arts to which 
modern science and invention have been or may be 
applied, the highest rates of wages are derived where the 
natural conditions of production are most favorable, and 
where, on that account, any given product is made at the 
least cost, I have not yet proved that the theory is sus- 
tained by the facts. 

It is held that this proposition is an apparent paradox, 
and that I have treated it as an elementary truth, which 
will not, however, be readily accepted without further 
demonstration. I have therefore devoted to this subject 
an article supplementary to those which I had intended 
to form this series. 

This proposition is not an a priori theory or hypothesis, 
it is, in mathematical terms, a theorem ; in economic 
speech, it is a statement of a principle ; in practice, it is a 
rule governing the actions of men when not interfered 
with by statute law. It is the only proposition on which 
the application of machinery to production can be jus- 
tified. If science, when applied to production, takes away 
the work by which men and women have previously 
gained the means of living, without providing other and 
better types or kinds of occupation ; if mechanism does 
not assure a larger product and better wages, — then the 

159 



l60 TAXA TION AND WORK, 

machine-breakers would be justified. In that case the 
only rule of progress would be the continuance of hand- 
work, without the mechanical appliances by means of 
which a few skilled working people or operatives do that 
which formerly required the continuous and arduous work 
of great numbers. It may be held that higher wages, both 
in money and in what money will buy, follow as a conse- 
quence from the lower cost of production, which is brought 
about by the application of invention and skill to the use- 
ful arts ; or, in other words, that high wages are not 
merely the complement or correlative of the low cost of 
production, but are a cofisequence or necessary result of 
such low cost. 

A great deal of the mis-legislation which has done so 
much injury in the world would have been saved, had the 
true source of wages been developed at an earlier date. 
The conception of a wage fund, or sum of capital accumu- 
lated as an antecedent from which wages might be paid 
in the process of production, led of necessity to the con- 
clusion that the rate of wages would be determined by the 
number of persons among whom such given and neces- 
sarily limited amount of capital should be distributed. 
Hence the apparent antagonism between capital and 
labor. 

The writer has not had time for any exhaustive study 
of works upon political economy ; he has been obliged to 
develop his own conceptions, first, through observation 
of the facts governing industry, subsequently by referring 
to the books of reference in order to determine in what 
measure the previous theories of the economists might 
prove to be consistent with the facts. Having reached 
the conclusion, at a very early period in his own observa- 
tions, that all profits, wages, earnings, rents, interest, taxes, 
and stealings were derived from the joint product of capi- 



3 \ 



HIGH WAGES AND LOW COST, l6l 

tal and labor, and that wages were not derived from a 
division of capital previously set apart as a wage fund, he 
found the first conception of this development of a theory 
of wages, in any complete or logical manner, in the works 
of the late Prof. J. E. Cairnes ; it has subsequently been 
very exhaustively treated by Dr. Francis A. Walker. It 
may now be held to have displaced the former theory of 
the wage fund in all progressive economic thought. Deal- 
ing with wages from this point of view the facts are, or 
appear to be, as follows. The tendency of industrial pro- 
gress is manifold : 

1st. In all arts which are above mere handicraft or 
mere manual labor, less capital is required — using the 
word capital as that part of the previous product which is 
put to reproductive use — in ratio to a given product, in 
just the measure that the capital invested in tools, imple- 
ments, and machinery becomes more effective. 

2d. As the capital becomes more effective, and in some 
cases more automatic, it can be operated by persons of a 
lower grade in their general intelligence than it could 
before. Such persons can be trained to special aptitude 
in the use of machines in given directions, so as to bring 
about a constantly increasing product, while those of 
greater capacity are enabled to take up higher or less 
arduous occupation. 

3d. With this increasing product at lessening cost, 
consumption is increased and a wider market is opened. 

4th. As that wider market is developed, while prices 
may be diminished, the margin above the cost of such 
larger production — that is to say, above that which will 
suffice to remunerate both capital and labor — becomes 
larger, even though it be a lessening proportion of each 
unit of product. 

5th. With this increase of product ensues a larger and 



1 62 TAXATION AND WORK, 

larger excess over and above the immediate necessities 
of the mass of the people for mere provision for shelter, 
food, and clothing. This excess constitutes that which is 
set aside or saved as capital to be applied to further pro- 
duction. 

6th. As this excess becomes greater and greater in 
ratio to the absolute need for mere shelter, food, and 
clothing, competition arises among those who possess it 
to apply it to further productive use ; then with this 
steadily increasing competition of capital with capital 
there comes a tendency of profits to a minimum. 

7th. On the other hand, there also arises a careful selec- 
tion of that particular place where the natural resources 
or surroundings are most favorable, and there also arises 
a competition among capitalists to secure the services of 
the most effective workmen and to induce them to mi- 
grate to that point where the best conditions are to be 
found for any given product and where they may earn 
the highest wages. 

8th. This kind of competition tends to enable the 
workman to attain higher and higher wages in other arts 
and thus to yield to the workman an increasing share of 
an increased product. 

In this sequence of events we find a rule that differs 
slightly from that laid down by Carey and Bastiat about 
which there was great contention as to who might 
claim to have firgt stated it. That rule was this — quoting 
by memory : '' in proportion to the increase of capital, 
the share of product falling to the capitalist may be aug- 
mented absolutely but it will be diminished relatively, 
while the share falling to the workman will be increased 
both absolutely and relatively." This proposition may 
rightly be amended so that it may be stated : '' in propor- 
tion to the increasing effectiveness of capital these results, 



*i 



HIGH WAGES AND LOW COST. 1 63 

i.e. 2, lesser margin of profit and higher wages, will follow, 
without regard to the money value of such capital which 
would ordinarily be comprehended under the term 
increase." 

In order to avoid all confusion by reference to esti- 
mates in terms of money, one may state this rule in the 
following form : in proportion to the application of 
science, invention, and skilled labor to the arts of produc- 
tion the product will be increased, the share falling to the 
owner of the capital will be relatively diminished in ratio 
to the joint product, but the share falling to the skilled 
workman will be augmented both absolutely and also rela- 
latively to the joint product. 

As I have previously stated, my observation led me to 
remark the tendency of profits and interest to become a 
lessening share in every art which has been consistent 
with a natural or normal development in this country — 
that is to say, consistent with a development that has not 
been unduly forced by tariff legislation. It has been 
observed that by far the greater proportion of the occu- 
pations of the people of this country have been developed 
without any substantial interference from State or na- 
tional laws changing the direction either of capital or of 
labor. More than ninety per cent, of the work of the 
people of this country is directed by the nature of things 
to that occupation which is freely chosen. 

Therefore, in attempting to observe and record the facts 
governing these classes of occupations which are only 
taxed and not artificially promoted by duties on imports, 
one may first deal with such branches of agriculture and 
the arts that are listed as manufacturing arts which must 
be conducted at home both for the home and foreign 
markets. 

Dealing then with wheat as a typical product of this 



164 TAXATION- AND WORK. 

kind, we first observe that in proportion to the applica- 
tion of agricultural machinery to this crop the tendency 
was developed to change in a considerable measure the 
place of production. This tendency did not wholly do 
away with wheat production at the former centres in the 
States of New York and Pennsylvania, In those two 
States, while the product has increased even in recent 
years as a crop planted in rotation with others, yet it has 
not increased proportionately with the demand and with 
the increasing supply. Wheat production has established 
itself on prairies upon wide areas of land in the North- 
west, California, and elsewhere, at a great distance from 
the chief market, but where machinery can be most 
effectively used and where the natural resources have 
proved to be so great as to enable the wheat-grower to 
apply the maximum of the most effective capital with the 
minimum of the most skilful labor. The result has been 
to overcome the disadvantage of distance and to pro- 
duce wheat at the highest rates of wages paid in that 
art anywhere in the world — yet at the lowest cost of 
production. 

The accounts which I have received from one great 
farm in California were so incredible that I could not 
believe them until I had verified the statements of my 
correspondent at every point. In the year 1890 the 
product of three thousand acres of land in California, 
which had been under cultivation many years without 
any sign of exhaustion, was 54,000 bushels, at a labor cost 
of less than four cents a bushel. The result of the labor 
of one man for three hundred days, or what is the equiv- 
alent of one year\s work, one hundred and fifty days* 
labor of two men during the planting and harvest season, 
was over 15,000 bushels of wheat per man for three hun- 
dred days* work. 



HIGH WAGES AND LOW COST. 1 65 

Again, there is one branch of cotton manufacturing 
which one may claim to belong in the nature of things 
more to this country than any other : that is the making 
of coarse fabrics in which the material is the element of 
chief importance and the component material of highest 
cost, the labor of conversion into the fabric being the 
lesser. The manufacture of what used to be known as 
" Osnaburgs," for clothing, long since ceased in the North- 
ern States. It continued to be conducted as a handicraft 
upon the plantations of the South before the war, for the 
clothing of slaves, and among the people of the Southern 
mountains until a recent period before that section had 
been opened by railways. I may repeat again the analysis 
of this work which I made at the Atlanta Exposition in 
1 88 1. Within the same room at that Exposition were to 
be found representatives of the people of the Southern 
mountains working cotton with hand cards, spinning- 
wheels, and hand looms ; alongside were the finest ex- 
amples of modern machinery upon which a fabric was 
manufactured of which I picked the cotton in the field in 
the early morning, to be carded, spun, woven, dyed, and 
made up into a dress suit which I wore at a reception on 
the evening of the same day. 

Calling to my aid an expert manufacturer of coarse 
yarns from the North, we timed the product of those who 
were working by hand, and we found that the five per- 
sons working in the Northern factory on the same fabric 
would produce one hundred-fold as much. The five 
hand-workers could convert a few pounds of cotton into 
eight yards of " Osnaburg" In one day, working ten hours ; 
five operatives in a Northern factory, working in a little 
different proportion, were capable of producing eight 
hundred yards of the same fabric. Wages in the moun- 
tains at that time were said to be about twenty-five cents 



1 66 TAXATION AND WORK. 

a day, whenever any hired labor was called for or could 
be paid for. As a rule, the people were independent and 
not interdependent, working hard to supply their own 
meagre wants. At twenty-five cents a day for five per- 
sons the labor cost of eight yards of cloth amounted to 
fifteen and a half cents per yard. In the Northern factory 
five persons on the same fabric, earning one dollar a day, 
each making eight hundred yards, reduced the cost of 
labor to five-eighths of a cent a yard. This is an extreme 
example of the application of the rule that the lower cost 
of production is due to the application of science and 
invention at the higher rates of wages : also the lower 
the price of the product and the greater the abundance, 
the more the benefit to the consumer. In this instance, 
the cost of the labor in the hand-made fabric would be 
twenty-five times the cost in the factory — the wages in 
the factory four times as much as in the handicraft. 

In Vol. XX. of the United States Census of 1880 may 
be found the statistics of wages and prices more fully 
developed than they ever had been before in any treatise 
upon the subject that has ever come to my knowledge. 
That volume was compiled by Joseph D. Weeks of Pitts- 
burgh, a gentleman with whom I differ profoundly in 
economic theory, but whose work in this census is a monu- 
ment of industry and thoroughness. For what reason a 
similar investigation did not form a part of the census of 
1890 I am not informed. An effort is now being made to 
secure a special appropriation for the continuation of this 
most important branch of investigation from 1880 to 1890 
and in subsequent years. It is hoped that this appropria- 
tion may be made and that this necessary work may be 
done. 

There are great differences in the value of the statisti- 
cal data which arc to be found in this volume. It may 



HIGH WAGES AND LOW COST. 1 6/ 

not be that all the statements can be appHed in demon- 
strating the rule under consideration, for the reason that 
in respect to a great many articles of manufacture there 
have been changes in the type of the product, in the 
quality, in the style or fashion, and in many other ways ; 
yet one who knows how to select articles for analysis 
from among the many upon which reports are made in 
this volume will find a great number of examples of the 
rule of higher wages and lower cost of production. Take, 
for instance, coarse sheeting, commonly known as standard 
sheeting, which has been made of the same weight and 
quality for more than fifty years. I have frequently cited 
this example. The farmers' daughters of New England 
who first entered the cotton mill forty to fifty years ago, 
in order to improve their narrow and laborious conditions 
of life, worked thirteen to fourteen hours a day on ma- 
chinery which was very far from being automatic, and 
which required a high standard of intelligence to work it 
at all, producing on the average in one year about five 
thousand yards for each operative engaged, either in card- 
ing, spinning, or weaving. Their earnings upon the 
average were one hundred and seventy-five dollars per 
year while engaged in this arduous work. The factory 
was low-studded, badly lighted, and ill ventilated. At 
the present time a class of operatives, who could not have 
worked upon the machinery forty to fifty years ago be- 
cause it demanded more individual skill, are now engaged 
in the same branch of manufacture. They work ten hours 
a day, and in that period of labor they earn in each year 
over $300. The average product is thirty thousand yards 
for a year's work ; the capital is more effective, but has 
been lessened in money valuation ; the labor is less ardu- 
ous ; the price of the goods to the consumer is much 
lower. Herein we have a complete example of a lessening 



1 68 TAXATION AND WORK, 

margin of profit, an increase of product, lower prices to 
the consumer, and higher wages both in money and what 
money will buy to the working men and the working 
women. 

Among the many examples of reduction in cost, accom- 
panied by higher rates of wages to be found in Vol. XX., 
I may cite the following articles, which serve strictly 
useful purposes, and which must have been made through- 
out the period covered by the dates of uniform and good 
quality. In very many instances, however, the quality 
has been improved, while the cost has been reduced and 
the wages have been augmented. 

Glass Tumblers. 

Average earnings in i860 of 14 classes of operatives, each per day, $1.22 

Price per dozen tumblers $1.50 to 1,25 

Average earnings in 1880 of the same classes, each per day. ..... 1.63 

Price per dozen tumblers 30 cts. to 25 cts 

Edge Tools. 

Average wages in i860 of 11 classes of workmen, each per day $1.92 

Price of chopping-axes per dozen ii.oo 

Average wages in 1880 of 11 classes of workmen, each per day,. . . 2.26 

Price of chopping-axes per dozen 8. 50 

Carriages and Wagons. 

Average wages in i860 of 10 classes of workmen, each per day. ... $1.71 

Price of a spring wagon 150.00 

Average wages in 1880 of 10 classes of workmen, each per day. ... 2.16 

Price of a spring wagon 115.00 

Milling Wheat. 

Average wages in i860 of 10 classes of workmen, each per day. . . . $1.31 

Labor cost per barrel of flour 78 cts. 

Average wages in 1880 of 10 classes of workmen, each per day. . . $2.19 

Labor cost per barrel of flour 52 cts. 

Furniture. 

Average wages in 1865 of 11 classes paid in greatly depreciated 

paper money, each per day • • $2.45 

Price of common extension tables per foot 1.56 

Cost of labor per unit of product 35 cts. 

Average wages in 1880 of 11 classes, paid in gold, each per day. . . $2.45 

Price of common extension tables per foot i.io 

Cost of labor per unit of product , , 31 cts. 



HIGH WAGES AND LOW COST. 169 

Since 1880 there has been a further reduction in the 
cost and price of most useful products, and an advance in 
the rate of wages computed at ten to thirty per cent., 
according to the relative skill required in the work. 

These examples prove the rule which is based upon an 
economic principle, to wit : that in proportion to the ap- 
plication of science and inventions to the useful arts under 
free conditions of trade such as prevail among the States 
of this Union, low prices and high wages are the necessary 
consequence or result of a low cost of production. 

Were the conditions of trade as free with foreign coun- 
tries as they are among our own States, the same rule 
would apply, and this country would control the commerce 
of the world, because the rates of wages earned here from 
the largest product of useful goods and wares would be 
the result of our low cost of production. Corollary : That 
country in which the rates of wages are the highest has 
the greatest motive for establishing Free Trade with all 
others, whatever the tariff system of other countries may 
be. 



CHAPTER XXIII. 

The Use of Machinery by Nations. 

It may now be expedient to develop and describe some 
of the advantages of this country in comparison with 
other machine-using nations in order to determine in what 
those advantages consist and to what extent the power 
of this country, therefore, exists to supply an increasing 
proportion of food to nations or States that cannot pro- 
vide the quantity or quality required for their own con- 
sumption, also to determine how far our power now exists 
or may be developed to meet the demand of the non- 
machine-using nations of the world with manufactured 
goods, metal-work, and other fabrics. 

It may be observed that the appHcation of machinery 
to production had been brought about in greatest measure 
in Great Britain until a recent period. The application of 
machinery and of modern tools and appliances has since 
been developed in the United States more effectively and 
universally within the present generation. We now stand 
at the head among nations in labor-saving processes. 
Among European countries, France (including Belgium) 
stands next to Great Britain, Germany comes third, the 
Netherlands fourth, while Italy, Austria, and Spain follow 
at long distance behind their continental competitors; 
Russia, in view of the handwork of her peasantry, can 
hardly be counted as a machine-using nation, although 

170 



THE USE OF MACHINERY BY NATIONS. I /I 

under an almost prohibitive system of duties a little 
unhealthy progress has been made. 

The very slight impression that modern mechanism has 
made in India is of little account, while in China hand- 
work is the rule, almost without exception. 

It may, therefore, be observed that the chief competi- 
tion in the supply of non-machine-using nations with the 
useful fabrics of common consumption that are made by 
machinery, rests between the United States and Great 
Britain. The population of the United States is now 
about sixty-five millions, Canada may be classed with this 
country in view of the certainty that within a very short 
time the grotesque absurdity of tariff barriers will become 
apparent when a commercial union will ensue. There 
are about thirty-three millions in England and Scotland ; 
four and a half millions in Ireland. 

The other machine-using populations of the continent 
of Europe number substantially as follows : 

France and Belgium 45,000,000 

Germany and the Netherlands. 50,000,000 

Total 95,000,000 

The States which have applied machinery in some small 
measure, and which may share with the principal machine- 
using nations in the production of useful articles by 
modern methods, mainly for home consumption, are : 

Italy, population 30,000,000 

Austria, Hungary 41,000,000 

Spain and Portugal 23,000,000 

Total 94,000,000 

Sweden and Norway compete in ocean transportation, 
but may be set aside with Russia, numbering together 



172 TAXATION AND WORK. 

about one hundred millions, from any effective competi- 
tion in the supply of other parts of the world with 
machine-made fabrics. 

We may therefore classify nations in their effective 
application of machinery to production for the general 
consumption of the world upon the following lines: 

1st. The United States and Canada, with a population 

numbering 70,000,000 

Producing a great excess of food and endowed with coal, iron 
ore, timber, phosphate deposits, petroleum, and other natural 
deposits in huge abundance, far in excess of present home 
consumption. 

2d. Great Britain, 33,000,000; Ireland, 4,500,000. 37,500,000 

Endowed with coal, of which the supply at moderate cost, 
especially of the varieties of coking coal required in metal- 
lurgy, is approaching exhaustion : endowed also with a large 
quantity but deficient variety and quality of iron ores ; now 
dependent upon other countries for more than one half the 
food supply. 

3d. France and Belgium. Well endowed with good land 
and capable of producing a small excess of food in a favor- 
able season, deficient in timber, endowed with a fair supply of 
ores and coal insufficient for domestic consumption 45,000,000 

4th. Germany and the Netherlands. Endowed with a 
small area of good soil and a large area of poor quality, de- 
ficient in food supply and exposed to great scarcity in a bad 
season, deficient in timber, possessing a very limited supply 
of coal and a moderate supply of iron ores of low grade 50,000,000 

Total 202, 500,000 

Within this small limit of one-seventh of the popula- 
tion of the globe is to be found the only effective 
application of modern science and invention on any 
considerable scale, such as may entitle them to be in- 
cluded as in any sense among nations competing with 
each other in the service of other nations, by the applica- 
tion of machinery. 



THE USE OF MACHINERY BY NATIONS. 1 73 

Russia, Sweden, and Norway may be set apart, not to be 
counted as effective in competition 100,000,000 

Italy, Austria, Hungary, Spain, and Portugal, serving other 
countries in moderate measure with iron ores, grain, and 
wine, but on the whole not to be counted as effective com- 
petitors in the application of machinery 94,000,000 

Total , 194,000,000 

There remain the populations of Asia, Africa, Australa- 
sia, South America, Central America, and Mexico, con- 
taining a population of over one thousand million people 
(1,000,000,000), whose resources have only been developed 
by the railway and steamship within a single generation, 
and whose application of modern mechanism, aside from 
methods of transportation, is in its very infancy. 

Endowed with unlimited power to supply by handwork 
crude materials in exchange for the products of machinery, 
these people stand waiting to exchange their products 
with those nations who will work them into the machine- 
made fabrics that they require. They will give ten, 
twenty, and even in some cases one hundred days of hand- 
work in exchange for one day's work of one man or 
woman occupied in the direction of modern machinery. 
We obstruct and try to stop this mutual service. 

^ Great Britain admits these crude materials wholly free 
of taxation. France, Germany, Belgium, and Holland 
almost wholly free. 

The United States, at the dictation of the Unholy Al-i 
liance of Pig-Iron, Wool, and Silver, taxes them heavily, 
and thus extends the benefit of her tariff protection to the 
manufacturers of Europe while crippling her own. 

It will be observed that, with the exception of France, 
all European machine-using States import a large part of 
their necessary food ; depending on other countries in 
greater measure than they export food products. In 



174 TAXATION AND WORK. 

years when the harvest is not plentiful, even France is 
somewhat dependent upon other countries for food. The 
attempt to protect the farmers of France and Germany 
by duties upon the import of grain and meat has proved 
to be futile, and to the extent in which it has been a suc- 
cess in maintaining the prices of food higher than they 
would have been, it is a disadvantage to the consumers, 
especially to those engaged in the application of machin- 
ery to the arts of manufacturing. 

Chancellor Caprivi rendered the verdict upon' the Mc- 
Kinleyism of Germany in a recent speech to which refer- 
ence will again be made. I can only quote a few detached 
paragraphs. 

"German agriculture is in a bad way. . . . It is undoubtedly true 
that these high protective duties have not done for the farmer what was 
expected of them. . . . They have only given Protection when these high 
duties coincided with periods of calamity or short crops in other countries. 
. . . Even if we were willing to continue under our existing system, the 
continual struggle for existence would force Germany to give up one industry 
after another. . . . We have overreached ourselves. . . . Should we 
imitate the tendency which prevails in Russia, America, and France, and 
keep ourselves in isolation from other nations the consequences of such a 
fatal step would be a war of all against all. . . . It is not a question here 
whether we want Free Trade or Protection. The sole question is to find out 
the way of maintaining our agriculture and maintaining our industries at a 
reasonable profit, so that they may live and give work to the laborers. . . . 
We are inevitably compelled to an exchange of goods with other countries. 
. . . We must export goods or people. . . . The object of this 
measure is to ensure peace without the least aggressive aim." 

Chancellor Caprivi has been obliged to resign on the 
question of the control of the public education ; but the 
policy of the Dreibund treaty for mutual service between 
Germany, Austria, Hungary, and Italy is established. 

It will also be observed that the only countries in 
Europe which have a positive assurance of an abundant 
food supply by production or purchase are Great Britain 



THE USE OF MACHINERY BY NATIONS. 1 75 

and Holland, which are the only so-called Free Trade 
countries. 

The purpose of this analysis is to call attention to what 
at first seems to be a very singular fact — to wit, that the 
only call for the protection of a high tariff in this country 
or in any European State is directed against the competi- 
tion of the countries that are well furnished with a most 
abundant supply of food either by production or ex- 
change. Our own tariff has been framed mainly for the 
purpose of obstructing imports from Great Britain, which 
is the best-fed nation in Europe. France and Germany 
have resisted the import free of duty both of the products 
of agriculture and of manufactured goods from the United 
States, which is the best-fed nation in the world ; they 
also resist the import of the manufactures of Great Britain 
which stands next to the United States in its adequate 
supply of food ; the one produces the excess of food that 
the other requires and imports free from taxation. If our 
trade were as free with Great Britain as it is among our 
several States, to the end that each country could supply 
itself with its relative wants by the exchange of its food 
and other products, there would not be a shadow of 
chance for any other machine-using nation on the conti- 
nent of Europe to enter into competition upon any 
extensive scale with the manufactured goods of this 
country or Great Britain in the supply of the non-manu- 
facturing nations of the world. 

One of the reasons which I may assign in explanation 
of this condition, to wit, that any competition with the 
well paid and highly fed English-speaking people of Eu- 
rope and America is impracticable is in the mere fact that 
they are well fed. We may reason upon this subject by 
analogy ; a steam-engine may be of the very best type, 
the boiler made of the best kind and rightly set up ; still, 



176 TAXATION AND WORK, 

if the fuel is deficient, the supply of energy will be di- 
minished in a proportion vastly greater than the meas- 
ure of the pounds of fuel wanting. In other words, the 
steam-engine must be worked at its full standard and must 
be supplied with fuel adequate to that standard, or else 
it will do very ineffectual service. The engine must not 
only have its full supply of fuel, but it must have the 
right kind furnished in due proportion. 

As coal supplies energy to the steam-engine so food 
supplies energy to the human engine. Food must be 
sufficient in quantity ; it must be rightly prepared, and 
it must be of the right quality and kind. This supply of 
food is far more complex than the problem of the supply 
of fuel required by the steam boiler. Even the quantity 
may apparently suffice, but if the nutrients are not in 
right proportion, the man may almost starve and may be 
wholly incapable of effective work. These nutrients con- 
sist in certain proportions of the hydro-carbons, or 
starchy materials ; of fats, which are derived from ani- 
mal or vegetable products ; and of nitrogenous materials, 
scientifically called Proteids, which are derived, in princi- 
pal measure from meat, but may be derived, where meat 
is lacking, from the leguminous products of the field, such 
as peas, beans, and the like, and also from cheese. The 
nitrogenous element in food is the one by which muscular 
energy and power of work are mainly supported. If 
this element is deficient, the nation wherein it is deficient 
will be incapable of the highest measure of production and 
will be apt to have its working force classified under the 
head of ''pauper laborers." In other words, it begins to 
appear that the whole body of pauper labor of nations and 
States upon the continent of Europe is as a rule under- 
fed or ill-fed labor, the deficiency being mainly in the 
element of nitrogen • that is to say, in the special nutrient 



THE USE OF MACHINERY BY NATIONS. lyj 

from which the working energy of man is mainly derived 
or without which, whatever may be the abundance of 
starch and fat, muscular energy and the power of continu- 
ous application to any kind of work will be wanting. 

In the matter of food, the problem of this country is to 
stop the waste of our abundance, the problem in England 
is how to keep up an abundance by exchange, the problem 
in France how to distribute and convert into food a fairly 
adequate supply of food material, the problem in Ger- 
many how to supply the army without impairing the 
power of the people to work, the problem in Italy how to 
avoid starvation, the problem in Russia how to cope with 
famine. 

If we follow this sequence it becomes apparent that 
the rates of wages or earnings of the working people 
rest either upon the adequacy of the supply of food as 
an antecedent, or follow downward with the increasing 
deficiency of food in the order given. Using figures as 
mere symbols and not as measures of the differences, and 
yet not varying very much in their proportion as a meas- 
ure of relative conditions, the rule of cause and effect or of 
effect and cause may be defined in the following series : 

As the supply of food is represented by the high num- 
bers so is the rate of wages. As the supply of food dimin- 
ishes so does the rate of wages lessen. 



Proportionate 




Proportionate 


- supply of 


to 


rate of 


food. 




( wages. 


United States, as 6 




to 6 


Great Britain, as 5 




to 5 


France and Belgium, as 4 




to 4 


Germany, as 3 




to 3 


Italy, as 2 




to 2 


Russia, as i 




to I 



There is, however, one class of the population of each 
country which must be and is supplied not only with food 



178 TAXATION- AND WORK, 

but with an adequate supply of the nitrogenous element 
to keep it in full working condition, even if the work 
of the rest suffers. 

The masses must yield even to starvation in order that 
the classes in the armies and navies may be well nourished. 
When nations are listed in ratio to the proportion of neces- 
ary food which is wasted in passive war, the foregoing order 
is reversed. 

The sequence is as follows, interpolating Austria which 
has a fair supply of food, yet is forced to waste if; in great 
preparations for war. 



Russia wastes 


as 6 


wages I 


Italy 


as 5 


2 


Austria " 


as 4 


" 3 


Germany " 


as 3 


" 4 


France " 


as 2 


" 5 


Great Britain " 


as I 


" 6 


United States wastes 








because we keep our army usefully employed as a border 
police, and we waste but little more money on the navy 
than is necessary to keep up our communications by swift 
cruisers with our foreign ministers and consuls. There- 
fore our wages are highest, being derived from the most 
abundant product. 

The supreme importance of the food problem has been 
foreseen in Germany more than in any other country. In 
the recent epoch-makingspeechof the German Chancellor, 
Caprivi, previously quoted, in support of the reciprocity 
treaty with Austria and Italy, he said : 

" All that we import from outside nations we need ; it consists mainly of 
indispensable articles of food and of raw products for our industries." 

"... In the past years, when I was a soldier myself I formed the 
unshaken conviction that in any future war the question of feeding the army 
of the country would play a most important role." 

That which was so apparent to Chancellor Caprivi when he 
was a soldier, became the chief work of Count von Moltke 



THE USE OF MACHINERY BY NATIONS. 1 79 

and the German Staff, and it was the German army sau- 
sage, compounded in the right proportions of nutri- 
ents in the smallest and lightest compass, that enabled 
the soldier to make a strong broth in his camp kettle 
wherever he encamped, and thus rendered possible the 
great concentration of troops at Sedan, and made the 
siege of Metz an assured victory. 

That great army must still be sustained in full strength 
even though the supply of food for the working people 
of Germany has become so deficient that the water in 
which the meat sausage of one man has been boiled, pos- 
sesses a commercial value and is sold to the next man 
who has no sausage to boil, but is nourished with black 
bread even in the rich city of Frankfort. 

Within a few years the relation of the cost of food to 
earnings has begun to be examined by scientific methods. 
Enough is known to state the case in a general way. The 
proportionate cost of an inadequate supply of food in the 
families of working people upon the continent of Europe 
is from 55 to 70 per cent, of their meagre incomes; in- 
creasing in ratio as the income diminishes. In the eastern 
part of the United States the cost of a wasteful supply is 
about 50 per cent, of the average earnings of average 
mechanics and artisans. In the West it is much less and 
may even run below 40 per cent. 

I have lately made a beginning in establishing the data 
of comparative nutrition. 



CHAPTER XXIV. 

The Waste of Armies. 

The reasons for the admission free of duty of the crude 
materials which are necessary in the processes of domes- 
tic industry have been fully treated and will not be again 
referred to in this series. The practical absurdity of 
attempting to give tariff protection to the farmers of this 
country has been dealt with. The separation has been 
made between those branches of the mechanic arts and 
manufactures which must in the nature of things be con- 
ducted within the limits of our own country and those of 
which a product of like kind might be imported. The 
nations which have applied modern machinery to produc- 
tion have been distinguished and set apart from those 
which have been classed as the non-machine-using nations. 
The reasons have been given why those nations who have 
appHed modern science and invention to the greatest 
natural resources have attained a dominant position in 
manufactures and in commerce by supplying the people 
of other countries with goods made at a relatively low 
cost of production as compared to the conditions of the 
nations which they supply and yet at much higher rates 
of wages. Reasons have been given why the effectiveness 
of labor is proportionate to the supply of food ; or even 
proportionate to the supply of that part of the food which 
yields nitrogen, which is the most costly and most neces- 

i8o 



THE WASTE OF ARMIES. iSl 

sary source of physical energy and of the power to main- 
tain continuous work or labor. 

Upon a final analysis of all these conditions, the actual 
competition among nations has been narrowed down to 
four groups of States : to wit, the United States, Great 
Britain, France including Belgium, and Germany includ- 
ing Holland. 

Were it not for the assumed necessity of protecting the 
domestic industry and the home labor of this country 
from the competition of the people of the three geo- 
graphical divisions named in this list, one may rightly 
affirm that there never would have been any tariff ques- 
tion in the sense in which that term is commonly used in 
this country. The attempt to exclude wool and other 
crude products would never have been suggested and the 
present contest would never have happened. In a final 
treatment of the question we may therefore narrow it 
down to a consideration of the relative conditions of the 
countries named. 

With respect to the three European sections compris- 
ing three great States and two small ones it will be ob- 
served that Great Britain is called a free-trade country, 
using that term not in a scientific but in a practical way. 
The duties which Great Britain imposes upon imports are 
substantially limited to spirits, wines, tobacco, tea, coffee, 
and dried fruits. They are imposed wholly for revenue 
purposes, and in respect to spirits and fermented liquors 
are balanced by internal taxes on the same articles. 

Holland was the typical free-trade country of Europe 
down to the period when under the domination of Na- 
poleon a huge debt was imposed upon this small state 
which rendered recourse necessary to duties upon imports. 
Belgium imposes moderate duties for revenue only, with 
careful discrimination. Germany under Bismarck's rule 



1 82 TAXATION AND WORK. 

was subject to a high tariff, which, having failed to pro- 
duce the expected results is now being rapidly modified. 
France is subject to very high duties upon imports with 
countries with which she has not negotiated commercial 
treaties ; not, however, as high as our own. In all these 
states the crude materials which are necessary in the 
processes of their domestic industry are substantially 
free from duties and each possesses a considerable for- 
eign commerce. 

Discriminating among them it will be remarked that 
the exports from Great Britain consist mainly of useful 
fabrics ; the products of iron, steel, wool, cotton, chemi- 
cals, and the like. The exports of Holland mainly con- 
sist in re-shipment of imports from her colonies of dairy 
products, and of fresh vegetables to Great Britain. The 
exports of France mainly consist of wines, silks, and 
finished goods which depend more upon fashion and style 
than they do upon utility for their market. The exports 
of Belgium consist either of very cheap goods, produced 
mainly by handicraft ; or of very costly goods, like Brus- 
sels lace, which are wholly the product of the lowest 
priced hand labor, barely earning a wretched and miser- 
able subsistence. The exports of Germany are various 
and have been greatly increased in recent years by the 
application of what is known as " the basic process " to 
the iron ores of Germany, which had previously been 
almost useless on account of the large percentage of phos- 
phorus in them. 

In dealing with the relations of these countries with 
each other it will be remarked that France and Germany 
have attempted to secure tariff protection against the 
imports from Great Britain and from this country ; yet 
the rates of wages in Great Britain are very much higher 
than they are in France, practically double what they are 



THE WASTE OF ARMIES, 1 83 

in Germany, while the rates of wages are considerably 
higher in this country than they are in Great Britain. 

The question then arises, What is it that has first 
given the chief control in the supply of the non-machine- 
using nations with manufactured goods and wares to 
Great Britain, and what is it that might give a paramount 
control to this country if we had not put ourselves at a 
great disadvantage by levying a tax on crude materials so 
as to maintain the relative cost of such materials in this 
country much higher than it is in Great Britain, whatever 
the actual price may be ? 

The answer to this question is very plain. The para- 
mount control of the commerce of the world has been 
vested in Great Britain through her position, the stability 
of her monetary system, and through her possession of 
what until within a few years were the principal deposits 
of iron and coal of the world. Through her position, and 
by working these deposits of coal and iron and their appli- 
cation to machinery and the manufacturing arts, through 
many years and down to a comparatively recent period 
protected by penal laws which made it a crime to disclose 
the methods of the construction of such machinery, Great 
Britain was enabled to resist the competition even of the 
United States. By her commerce, first artificially devel- 
oped, she has been able to purchase an abundant and 
ample supply of food, until her people are subsisted to 
the extent of more than one half upon food derived from 
other countries. This is a dangerous condition. It is 
necessary for Great Britain to carry the burden of her 
enormous navy. The supremacy of Great Britain in iron 
and coal has passed from her and has been assumed by 
the United States. We now hold the key to the com- 
merce of the world, and we now hold the dominant power 
to supply the non-machine-using nations of the world 



1 84 TAXATlOJSt AND WORK. 

with all kinds of useful wares and goods, because we pos- 
sess the coal and iron mines which can be worked at the 
lowest cost with the largest product. We can pay the 
highest rates of wages because our ores of coal and iron 
are mined with the least expenditure of labor by the 
measure of time or days' work. We produce the food 
and the cotton which the world must buy, because the 
cost is lower while the wages of labor are higher. 

I have said that we hold the key to the commerce of 
the world, but we have turned it so as to lock out the 
products upon which we might extend our work, our 
product, and our progress. 

Through these analyses we are brought again to the 
source of wages and to the distribution of the joint pro- 
duct of labor and capital from which all profits, rents, 
wages, interest, earnings, taxes, and stealings are alike 
derived or recovered. 

Not only is the product of Europe deficient compared 
to our own, but its distribution is bad. 

At the risk of repetition of data that I have previously 
given, either in this series or in my books upon the Dis- 
tribution of Products and upon the Industrial Progress of 
the Nation, I must again present the facts that govern 
the distribution of our excessively abundant product and 
of the meagre supply of the means of existence in Europe. 

The motive of this series as given in the title, Taxation 
and Work, are synonymous terms. All product is the 
result of all work, be it mental, manual, or mechanical, or 
a combination of the three methods by which all work is 
done. All taxation is derived from or constitutes a share 
of all work. Taxation is either direct or indirect. Direct 
taxation, in terms of work, consists in the conscription of 
the workman for enforced service in armies or navies. 
Indirect taxation, in terms of work, consists in taking a 
part of the product of worl^- by due process of law. 



THE WASTE OF ARMIES, 1 85 

Lawful taxation consists in taking such part of the 
products of work as may be necessary for the conduct of 
the government, by measures so devised that all the work 
that the people exert in supplying the means shall be 
secured to the benefit of the government, and shall not 
be diverted for the support of private enterprise. 

Unlawful taxation, making use of the terms lawful and 
unlawful as synonyms for right and wrong, may be imposed 
by measures that are legal for taking the property or work 
of one citizen and conveying it to another under the forms 
of law, which, nevertheless, '' constitutes robbery by a 
decree under such forms of law." — {Loan Association vs. 
Topeka, Reports of the Supreme Court ^ 

Each nation will be placed at a relative disadvantage 
with another as it enforces one or the other of these 
methods of securing work from the people of each State. 

This relative disadvantage of a bad method of taxation 
may, however, be more than compensated by other ele- 
ments in the conduct of affairs governing production or 
by the possession of great resources. 

The greatest relative disadvantage among the machine- 
using or manufacturing States of Europe and America 
already named, consists in the system of militarism, or the 
subjection of the masses to the support of the military 
classes. The measure of this direct tax upon labor or 
work has already been stated in terms of money ; it will 
now be given in terms of work and money combined. 

Dealing in round figures and disregarding fractions, 
according the data of the Statesman s Year Book of 1892, 
the population of France, Belgium, Germany and Holland, 
numbers 96,000,000 ; or a number exceeding the popula- 
tion of the United States and Canada, by thirty-seven 
per cent. According to customary estimates the number 
of men of arms-bearing age in these four States, of which 
the united area is 436,851 square miles, or one-seventh that 



1 86 TAXATION AND WORK. 

of this country omitting Alaska, would be 19,250,000, 
of whom 1,236,000 are in camp, or barracks, or ships of 
war subsisting upon the work of the rest at a cost of $250 
per man, amounting to a tax of $314,000,000 a year. 
That is to say, one man in every fifteen is idle so far as 
productive industry constitutes occupation. If we assume 
that the product of each man's work in productive in- 
dustry in these States would possess a value of $300, 
a larger estimate than the work of 1,000,000 other men 
is devoted to the support of these armed forces and what 
remains of the product of the rest furnishes them the 
meagre, underfed support, which characterizes the con- 
dition of the mass of the people. This diversion of 
product from constructive to destructive purposes is 
especially noticeable in the deficiency of nitrogen in the 
food of the masses. The muscular energy of the army 
must be sustained even though the people starve. 

This waste of the energy of 2,236,000 men out of 19,- 
250,000 comes to a fraction under twelve per cent, of the 
whole force and renders it necessary for the women to 
perform the most arduous field labor, to do the scavenger 
work of the streets, to mix the mortar for the building 
trades and in many other ways to unsex themselves. 
Bearing in mind that these direct and indirect taxes upon 
work upon the machine-using States of continental 
Europe, take away the most vital element from produc- 
tion and the most essential element from an insufficient 
supply of food is not the mystery of pauper labor dis- 
closed ? Do not low wages and inefficient work cease to 
become a cause for dread here or to excite any fear of 
competition ? 

In evidence of this relative inefficiency, I may cite the 
following on the authority of Mr. Chauncey Smith who 
was the counsel of the McKay Sewing Machine Company. 



THE WASTE OF ARMIES. 18/ 

The machines made by this company throughout the 
duration of its patent rights and of its existence were 
made in the same way, they were all owned and kept in 
repair by the company, the revenue was derived from the 
sale of stamps, one of which was to be attached to each 
pair of boots and shoes made upon the machine. The 
revenue derived from the machines thus put in operation 
in Europe was only two thirds as much as the revenue 
derived from each machine on the average in the United 
States. Ex imo disce omnes. 

From this example, the relative conditions of the com- 
petition between the continental States and the English 
speaking people of Great Britain and the United States 
may be comprehended. Upon the continent of Europe 
it requires longer hours and a greater number of working 
men or women to do the work, the wages in all arts are 
lower but the cost of labor by the unit of the product is 
in almost all cases higher. Except for the variations in 
the relation of wages to cost of labor which have been 
brought about by restrictions upon trade this rule would 
apply to all cases. 

If the standing army of the United States bore the same 
ratio to the number of men of arms-bearing age as those of 
Germany, France, and the Netherlands, we should now 
have 850,000 men in active service and at our higher ratio 
of product it would take the work of at least 650,000 men 
to support them, making 1,500,000 men in all. By so 
much as this burden is less our power to compete with 
France and Germany is greater ; we deprive ourselves of 
a part of this advantage by taxing crude materials that we 
require while they admit them free. 

But the burden upon Great Britain is less but still 
severe, especially in the necessary construction and sup- 
port of her navy. In proportion as her burden is less is 



1 88 TAXATION AND WORK. 

her product greater, her wages higher and her competition 
more urgent as compared to continental Europe. Yet 
so far as the mere equivalents of taxation and work for 
the support of the national government, army and navy 
interest on debt and pensions can be expressed in terms 
of money, her assessment in 1890 was nine dollars and a 
quarter per head while ours was only five dollars and a 
quarter. We must, however, add to our own tax the evil 
effect of a bad system which almost if not quite doubles 
the sum. But even then, in proportion to oiir greater 
product we are subject to a lesser burden of taxation as 
compared even to Great Britain, while in respect to the 
States of continental Europe our burden is trivial. 

National debts work a different distribution of the pro- 
ducts of labor from what would otherwise be made, and 
therefore may create great differences in the relative 
conditions of the classes who own the bonds as compared 
to those who are taxed for the interest. 

The only national debt which is being diminished in 
Europe is that of Great Britain ; others are increasing. 
The interest-bearing debt of the machine-using nations 
that I have listed, Great Britain, France, Germany, Bel- 
gium and Holland is about $10,000,000,000, say ten 
billions dollars, mostly incurred for purposes of war. Our 
own debt, bearing interest, is less than $600,000,000, all 
of which will soon be paid. 

When the English-speaking people of Great Britain, 
Canada and the United States are united in the peaceful 
bonds of reciprocal free trade, qualified by tariffs for 
revenue only, the continental States of Europe must 
disarm or starve. 

In the interval, the government of the masses for the 
support of the privileged military classes go on. That 
which is seen is the increase of debts, the increase of 



THE WASTE OF ARMIES. 1 89 

taxation, the growth of deficits, the spread of hunger and 
the enforcement of the conscription and the military drill 
with greater and greater severity. What is not seen but 
heard is the explosion of the bombs of the anarchist, the 
conspiracies and assassinations of the nihilist, the revolu- 
tionary excesses of the communist and the rapid spread of 
socialism when, even for a few weeks, the pressure of the 
government is removed. 

These are the complement of the policy of blood and 
iron and of military rule. 

It must be left to others to trace out the connection of 
cause and effect. All that I can do is merely to suggest 
what may be hidden behind the figures of Taxation and 
Work except to those who can apply the imagination to 
wrest from them their true meaning. 

In support of the theory that the rate of wages depends 
upon the supply of the nitrogenous element of food, I 
may give some facts which have been developed by an 
investigation of the comparative nutrition of countries 
and States upon which a beginning only has been made. 

A thirty days' ration that will support life without 
much power of work consists of fifty-three pounds of 
grain and vegetables with four pounds of fat — either 
butter, pork or suet. In Boston this quantity can be 
bought for $2.10, or at the rate of seven cents a day; 
flour purchased by the sack or barrel, the rest in small 
parcels at retail. Twenty-five pounds of meat added 
carries this life-ration to the standard of the working 
ration of a German soldier in active service. In Boston 
this quantity can be bought at retail, of the coarser or 
tougher portions of meat readily converted into nutritious, 
appetizing and tender food by right methods of cooking 
for $1.80, or at the rate of six cents per day, making the 
cost of adequate nutrition thirteen cents a day or ninety-one 



igO TAXATION AND WORK. 

cents a week. Coffee or tea may be added within the com- 
pass of $i.oo a week. Of course there are very few persons 
who can give the time or possess the gumption to secure 
a good subsistence at this low cost, but it is wholly 
feasible. In this land of abundance the food bill of an 
adult working-man is apt to be double the sum named 
and a large portion of what is spent for food material is 
wasted in bad cooking. That subject does not come 
within the scope of this treatise. Suffice it that one may 
obtain the full standard of nutrition of a Gerrnari soldier 
and vary the bill of fare every day in the week at a cost 
of thirteen cents a day in New England. 

In Michigan, Iowa, and Nebraska the cost of this full 
supply of bread, meat, and vegetables may be reduced, at 
the customary retail prices, to eleven and even to ten 
cents a day. In London and in Paris the cost is sixteen 
to seventeen cents. In Berlin, Nuremberg, Munich, and 
other cities of Germany the cost of the same quantity of 
bread, vegetables, and meat is twenty-one to twenty-three 
cents per cent. The wages of the workman permit no 
such expenditure ; he can barely secure a supply of food 
that will support life, he must forego the meat, and make 
up as well as he may for the deficiency of nitrogen by the 
consumption of peas, beans, lentils and other legumes, 
and of cheese. But when he has spent sixty to seventy 
per cent, of his meagre earnings for the food of himself 
and those who depend upon him he is still an underfed 
and ill-nourished man. For want of means he cannot buy 
the food which is necessary to efficient work, for lack of 
efficiency in the work he cannot earn more than enough 
to support life, and barely that. Meantime the army is 
supported on rations which have been most carefully com- 
puted so as to secure the maximum of energy. 

No wonder that the government of Germany is attempt- 



THE WASTE OF ARMIES. I9I 

ing to teach the working-people what food to buy and 
how to cook it, lest hunger should convert socialism into 
anarchy, and perhaps induce the conscript soldier who is 
now subject to a drill which has been denounced as cruel 
in its severity, to turn his rifle upon the privileged mili- 
tary class, by whom the policy of blood and iron has 
been enforced. 

The thrift of the French and their skill in cooking 
enables them to resist the lesser measure of want that 
afflicts France ; but her population is stationary, and 
Paris is a volcano ready to burst into a destructive erup- 
tion at any moment. Italy pays for armed liberty by 
semi-starvation, and, like Germany, is losing the better 
part of her working-people by emigration, while the less 
capable and ill-nourished remain. 

The benefits of modern science and invention, and the 
increased product derived therefrom, are grasped by the 
governments of continental Europe and expended in mili- 
tary oppression ; yet national debts and deficits increase, 
while the disciples of Lasalle preach the so-called '' iron 
law of wages," which has no application in a free country. 
It is based upon the conception that the lower the cost to 
which a bare subsistence may be brought, the lower will 
the rate of wages be forced. 

In the French Revolution the soldiers fraternized with 
the people. In the Revolution of 1848 they began to do 
so, but were checked. What will be their decision in 1893 
to 1898 if another bad harvest occurs? 

It matters not to this country, in the consideration of 
the subject of foreign competition, whether the conditions 
of continental Europe remain as they now are or culminate 
in revolutions ; the only aspect of the case to us is how to 
enable these underfed people to buy our food by enabling 
them to send us their products which are their only means 



192 TAXA TION AND WORK, 

of payment. Otherwise it will happen, as Chancellor 
Caprivi has put it, " Germany must export goods or 
men," and so must other European countries. Either the 
product or the laborer will come to this country : which 
can we assimilate most readily ? Would it not be better 
to make it for the interest of the French Canadians, the 
Italians, the Bohemians, and the Slavs to remain at home 
by opening the way for them to buy our excess of our 
grain, cotton, iron, oil, and goods in exchange for what- 
ever they can supply as the means of payrnent, rather 
than to promote their coming to this country faster than 
we can find suitable work for them to do ? 

As Daniel Webster once tersely put the case, " Can we 
afford to do the kind of work in this country which 
foreign paupers can do for us," without coming here and 
placing any greater difficulty upon us in the conduct of 
our government ? 



CHAPTER XXV. 

Senator Morrill's Report on Canada Received. 
Food and Wages. 

After Chapter XIX. of this series had been completed, 
a report made to the Senate of the United States by 
Senator Morrill and Senator McPherson, upon the effect 
of the McKinley tariff upon our commerce with Canada, 
was published. 

The report is written by Senator Morrill ; his colleague 
concurs in the statement of facts given therein, but does 
not concur in the conclusions that are drawn from them 
by Senator Morrill. One cannot greatly wonder at his 
reserve — he may soon perhaps give his own conclusions. 
No document has yet been published which gives such 
conclusive testimony in regard to the grave injury done 
not only to the people of Canada, but also of the United 
States, by the tariffs of 1883 and 1890. It was hardly to 
have been expected that Senator Morrill would read the 
true lesson on which he himself has become a most satis- 
factory witness. Senator Morrill labors under the delusion 
which is now shared by only a very small number of the 
older members of the Senate and of the House, that one 
of the effects of a duty imposed in this country upon a 
given import is to depress the price of that article in the 
country in which it is produced, and that by such reduc- 
tion the burden of our tax is put upon that country. 

193 



194 TAXATION AND WORK. 

It is difficult to deal seriously with this misconception. 
If it were true, it would be manifestly for our interest to 
transfer all our taxes to our neighbors ; it would also be 
manifestly as much for the interest of our neighbors to 
put all their taxes upon us. 

Again, if we could thus shift the burden of our taxes, 
on what ground could the remission of our tariff taxes 
upon tea, coffee, and sugar be justified ? Why should 
we not put eighty to one hundred million dollars' worth 
of the cost of our government upon the producers of tea, 
coffee, and sugar, which at the instance of a Republican 
administration, with the support of Senator Morrill, have 
been made duty free? 

There are, however, some conditions under which the 
effect of a duty upon imports into this country is to de- 
press the price of a dutiable article in the producing 
country ; this is one of the most evil effects of a high 
tariff system that can be conceived. Our duties upon 
the products of Canada have unquestionably had that 
effect, because a very large portion of the products of 
Canada are of such a nature that if they cannot be ex- 
ported to the United States they cannot be sold for export 
to any other point. 

We will now take up the testimony of Senator Morrill. 
After reporting upon the lessening population of the 
border towns of Canada, he says : 

*' From the testimony taken, it was clear that the United States offered 
better markets and higher prices for anything and everything that Canadian 
farmers had to sell, than could be obtained in the Canadian Dominion, and 
the price and value there of horses, cattle or sheep, hay, peas, beans, butter, 
eggs, and poultry, was invariably as much below the selling price in the 
United States as the amount of duties imposed and the cost of transporta- 
tion. . . . vSo far as the Canadian Dominion is concerned, there is 
no doubt that they bear the entire burden of duties imposed upon their 
exports into the United States." 



SENATOR MORRILL'S REPORT ON CANADA. I95 

Elsewhere Senator Morrill proves that the duties on pine 
boards had a similar influence on Canadian prices. Here we 
have a complete admission that when trade is obstructed 
by high duties imposed by a country of very great pur- 
chasing and consuming power, like the United States, the 
prices of the taxed articles must be reduced in the produ- 
cing country. What is the effect of that reduction? Under 
a treaty of reciprocity with Canada the Canadians bought 
from us goods, wares, and products of various kinds, to 
the full extent of the full value of their sales to us before 
the reduction in price. By reducing the receipts for 
their products in the measure of our taxes upon imports, 
we have therefore cut down the purchasing power of the 
Canadians ; by our own act we have reduced their ca- 
pacity to buy our products in that measure or even in 
greater measure. Who loses most ? 

Why in greater measure? Because the margin of 
profits upon Canadian products was probably in many 
cases so small as to be within the line of taxation. By 
reducing the prices of their products to the full measure 
of our taxes upon them we have destroyed their profit, 
and we have therefore forced them in some places to give 
up the entire product. This is proved by the increase of 
immigration from Canada to the United States, which 
will be subsequently treated. Having deprived Canadians 
of their work at home, they come here ; Senator Morrill 
is a good witness to this. 

Let him, however, carry his investigations further and 
deal with the same principle applied in other countries. 
Our tax upon pig-iron has depressed the price of iron in 
Great Britain and Germany ; our tax upon wool has de- 
pressed the price of wool in Austraha, South America, 
Antwerp, and London, precisely as our tax upon beans, 
potatoes, butter, and eggs has depressed the price of these 



196 TAXATION AND WORK. 

articles in Canada. A country of huge purchasing power 
Hke the United States cannot withdraw in part or be 
wholly excluded from any market anywhere, without in 
some measure depressing the price of the article which 
we are forbidden to purchase in that market. What then 
ensues? The consumers of the lessening product of 
Canada have been enabled to purchase food supplies for 
the operatives in their factories and in their workshops at 
a lower cost, and thus have perhaps been enabled to sup- 
ply the Canadian markets with goods that might other- 
wise have been purchased in this country. In the same 
manner our taxes upon pig-iron and wool have depressed 
the price of these most important crude materials in 
Europe. Senator Morrill perceives the effect in Canada, 
and he may perhaps say that we have thus put our tariff 
tax upon iron and wool upon the producers ; but when 
one looks a step beyond that first plausible but somewhat 
shallow conception, it at once appears that we have 
thereby given the consumers of pig-iron and wool in 
Europe a huge advantage over our own factories and 
workshops. 

The Senator next very naively relates the evil effect 
upon ourselves of our duties upon Canadian products : 
** Formerly," he says, " in the absence of all duties the 
Canadians sold their white winter wheat in our market, and 
took in return some of the cheaper spring wheat, bearing 
a less price. At that time Oswego, N. Y., milled about 
ten thousand barrels of flour a day, and now mills only 
about twenty-six hundred. The abrogation of the Ca- 
nadian reciprocity treaty rendered Oswego elevators of 
comparatively little use." 

What more damning evidence of injury to ourselves 
could be given than this ? Senator Morrill goes on with 
his testimony : '* When this trafific in flour was broken up, 



SENATOR MORRILL S REPORT ON CANADA. 1 97 

the Oswego elevators were devoted in part to storing 
Canadian barley," which is of better quality than the bar- 
ley grown farther South, for malting and converting into 
beer. But again, Senator Morrill testifies in a perfectly 
straightforward manner that ''although a higher rate of duty 
was placed on malt through the act of 1890 than in 1883, 
yet the higher rate on barley tended to exclude Canadian 
barley also. . . . Notwithstanding Oswego has less 
mining and lumber business than in former years, and 
since 1890 having its malting business threatened or 
wholly suspended, yet its citizens are by no means want- 
ing in courage, and have started new and prosperous enter- 
prises," among which Senator Morrill names '^shoddy-cloth 
milhr The people of Oswego must be very grateful to 
Senator Morrill and Representative William McKinley, 
Jr. These gentlemen and their coadjutors have decided 
that the people of Oswego were incapable of choosing the 
right investment for their capital or the right employment 
for their workmen, and having destroyed their capital and 
stopped the work of their laborers in milling wheat and 
malting barley, they now heartily commend their courage 
and enterprise in attempting to convert their old clothes 
into new garments by establishing '^ prosperous shoddy- 
cloth mills.'' Since this was written, the elevators, which 
had been in part destroyed by our tariff, have been 
wholly destroyed by fire. Does the Senator commend 
the fire ? 

We will now cite Senator Morrill's testimony upon the 
labor question. The declared purpose of the policy 
advocated by himself and his coadjutors is to maintain the 
rates of American wages while he deprives the laborer of 
the hard wheat, the better barley, the potatoes, the fish, 
the eggs, and the other foreign luxuries with which Canada 
might flood us. In order to maintain the rate of wages 



198 TAXA TION AND WORK, 

of the American farmer, lumberman, mechanic, and fac- 
tory operative he has taken the most effective measures 
to promote immigration from Canada. 

It will be observed that he bears witness to the fact 
that by taxing Canadian products we have depressed the 
prices, and that by so doing we have depressed the rates 
of Canadian wages. Manifestly this must be the result, 
because all wages are derived from the sale of the products 
of labor. To the extent that we have depressed the 
prices of Canadian products we have destroyed the power 
of Canadian employers to hire Canadian labor. Hence it 
follows, as Senator Morrill testifies, that '' wages are much 
less in the Canadian Dominion, ranging in amount from 
fifteen to thirty-three per cent., and in some cases even to 
fifty percent. . . . The average difference of all kinds 
of labor may be reckoned at rather more than less than 
twenty-five per cent. It was remarked that the wages of 
the laboring man in Nova Scotia and New Brunswick 
were twenty-five per cent, less than in Maine." 

Having thus converted the flour mills of Oswego into 
shoddy-cloth mills, having deprived the people of Canada 
of profitable work in supplying some of our wants, having 
reduced the rates of Canadian wages below the level of a 
comfortable living, what comes next? Again Senator 
Morrill, with unconscious integrity, bears witness. '' Com- 
mencing in April it was stated that there was a daily aver- 
age of about eight hundred Canadian and foreign immi- 
grants who passed through Newport, Vermont, on their 
way to New Hampshire, Massachusetts, and elsewhere to 
obtain employment, many of them brickmakers. In the 
fall of the year they mostly return. Another class comes 
in the fall and returns in the spring, but all come in con- 
sequence of higher wages. Some are destined to go as 
far as Savannah, Ga., and as the same parties appear, year 



SENATOR MORRILVS REPORT ON CANADA. 1 99 

after year, it may be presumed that employment has been 
promised." The evidence taken in Detroit was to this 
effect : " Many Canadian laborers come here, of course 
because of better wages, and because they can always find 
work here. . . . Some of the workingmen, although 
citizens of Detroit, rent houses in Windsor for the reason 
that rentals are much less there." This testimony in re- 
gard to what has been called '' the pauper labor " of Can- 
ada coming in competition with our workingmen in New 
England and other sections may be commended to the 
especial attention of those who wish to regulate immigra- 
tion. May not immigration from Canada be regulated 
by making it more profitable for Canadian workmen to 
stay at home and supply us from there with their products 
in exchange for our manufactures, — rather than by inducing 
them to come here, year by year, to work for a season, 
sending their wages back to Canada for the support of 
their families, while they themselves compete each season 
for a share of the work that is to be done here ? 

I may also venture to commend this statement to Sena- 
tor Dawes, whose definition of the principle of Protection 
I will now give : '* It is the principle, as I understand it, 
which leads one man to erect a fence between his pasture 
and that of his neighbor that he may the better enjoy 
his own." 

It would perhaps be well for Senator Dawes to repair 
the fence between Massachusetts and Canada which keeps 
out wool but lets in the shepherd, — keeps out potatoes 
but lets in the farmhand, — keeps out lumber but lets in 
the carpenter, — that keeps out the bricks but lets in the 
brickmaker. Perhaps the workingmen of Massachusetts 
will build that fence in another way. They will take off 
all the top bars and some of the lower ones ; they will 
make some gates in the fence so as to facilitate commerce 



^00 TAXATIOI^ AND WORJC. 

with Canada, and so as to induce the Canadians to stay 
at home where they may earn good wages by supplying 
us with fish, potatoes, eggs, barley, hay, oats, lumber, and 
other Canadian products, of which they will send us an 
ample abundance in exchange for the manufactured goods 
and wares of our own States. 

So much for this admirable report of Senator Morrill. 
Since this series of treatises was undertaken we have also 
been furnished with preliminary reports giving the data 
that have been secured by Col. Carroll D. Wright, in 
respect to wages and the cost of subsistence in foreign 
countries. The facts which have been given in these 
reports wholly sustain me in my own deductions made 
from my limited investigations, and also sustain some of 
my a priori and hypothetical conclusions in the most con- 
vincing manner. 

Time and space will not permit a complete analysis of 
this report. For present purposes it may only be re- 
ferred to in order to sustain certain propositions pre- 
viously given in regard to the relative earnings of the 
people of different countries, and also in support of my 
theory of the ratio of earnings to the food supply. I 
avail myself in part of the analysis of this report made by 
the Daily Commercial Bulletin of New York. From this 
it would appear that information has been obtained by 
Commissioner Wright from 5,284 families, representing 
27,577 persons, an average of 5.20 per family. The nor- 
mal family under the instructions given by the Com- 
missioner was to be selected under the following 
provisions : 

1. Both husband and wife. 

2. An expenditure for each of the following items : 
rent, fuel, lighting, clothing, food, and other purposes. 

3. Must rent the house in which it lives. 



SENATOR MORRILVS REPORT ON CANADA. 201 

4. Must not have more than five children, none over 
fourteen years of age. 

5. Must not have any boarders or tenants. 

One can only guess at what the normal family of this 
country really is, or what the normal income of the 
average working family of this country may be. From 
my own investigations I am very certain that it would 
substantially cover five persons, father, mother, and three 
children, and that the normal or average income of work- 
ing people in the strictest use of that term would be 
found on the line of $500 a year to each family ; there 
may be a substantially equal number spending between 
$400 and $500, and between $500 and $600. There would 
also be a much greater number between $600 and $1,200 
than there would be found below the $400 limit. 

The normal family among all classes is substantially 
five, but relatively few families are supported by one 
member. The group of which one is at work for gain 
consists of three persons, one of whom supports the 
other two. 

When the full report of Col. Wright's investigations is 
printed, together with the data now being gathered for 
the Senate Finance Committee, we shall probably be 
able to determine the relative income and expenditure of 
many classes of working men and women in this and in 
other countries more surely than we now can. 

Assuming that the analysis given in the Daily Com- 
mercial Bulletin is accurately computed, we find that, 
according to Commissioner Wright's figures, in the nor- 
mal family of 5.20 persons, as given by him, of which the 
working members are occupied in the cotton industry, in 
the woollen and worsted industry, in the production of 
pig-iron, and in the conversion of pig-iron into bar-iron 
(the latter being a class of high-priced workmen), — 



202 TAXATION AND WORK, 

The average income per family in the United States comes to $674 

In corresponding families in Great Britain the income is 510 

In France (pig-iron not being given, on cotton, woollen, and bar-iron 

only), average 418 

In Germany, on cotton, woollen, and bar-iron, average 287 

The advantage in this country is somewhat greater than 
my proportionate estimates. 

The earnings of these specific groups in this country are : 

135 per cent, above German rates 
61 " " the French 

32 " " the English. 

The relative proportion of expenditure may vary in 
other occupations ; our present purpose is to determine 
the relative purchasing power of that proportion of the 
income which is devoted to the purchasing of food in 
this country, Great Britain, France, and Germany by 
working people in these specific classes. 

The relative incomes of the three classes and the per 
cent, of money spent for food in the classes previously 
given are as follows : 

United States income $674 ; expended for food 44 % or $296 

Great Britain " 512; " " " 50 " 256 

France " 418; ** " " 48 " 200 

Germany " 287; " " " 50 " 143 

Recalling the fact that a ration equal to that of a 
German soldier in active service can now be purchased in 
Boston at twelve and one-half to thirteen cents per day, — 
in Great Britain at sixteen, — in France at seventeen, — in 
Germany and Belgium at twenty to twenty-three, — we 
then have the purchasing power of the income devoted to 
nutrition in its relation to food supplies. 

The purchasing power of $296, spent in New England 
in daily rations at an average of thirteen cents, yields 3,277 
rations ; $256, spent in Great Britain at sixteen cents, yields 
1,601 rations; $200, spent in France, at seventeen cents. 



SENATOR MORRILL S REPORT ON CANADA, 2O3 

yields 1,176 rations; $143, spent in Germany at twenty 
cents, yields 702 rations ; all for one year. 

We may rightly assume that the normal family, esti- 
mated by Commissioner Wright to contain 5.20 persons, 
possesses the consuming power of four adults. Divide 
the rations per family by four and we then find that the 
average sum expended per adult in the United States for 
365 days will give him 569 full rations. He spends his 
money for a higher price and quality. The average ex- 
penditure per capita in Great Britain yields 400 full 
rations for 365 days, or a good subsistence with a margin 
over, which corresponds to the condition of the well-fed 
prosperous English artisan or mechanic. In France the 
per capita expenditure yields only 294 full rations for 365 
days, which is consistent with the lack of meat and the 
relative lack of energy among the French. The purchas- 
ing power in Germany of that part of the meagre in- 
come devoted to food is only 176 rations for 365 days; 
all facts, observations, and figures indicate the underfed 
condition of the great body of German -workmen. 

It may be urged that the data are not yet sufificient for 
such a conclusion. Let it be remarked, however, that so 
far as these data prove anything they sustain the a 
priori theory derived by myself from broad and general 
averages, and they are sustained by the reports of special 
investigations. They correspond also to the observations 
of acute scientific observers who have witnessed in Ger- 
many the exact conditions named. These results are in 
themselves deductions from the widest, closest, and most 
scientific investigation of figures and facts combined that 
has ever been made in this or any other country. 

The conditions in Italy are worse and the increasing 
deficits are now forcing the government to diminish arma- 
ments under penalty of starvation. 



204 



TAXATION' AND WORK, 



Reference has been made to proportionate incomes. 
From an advance sheet kindly furnished me by Commis- 
sioner Wright from the Seventh Report of the Department 
of Labor now in press, I am permitted to give the propor- 
tionate incomes of 2,562 families, being only a part of 
those previously considered. In the United States, 

EARNING FAMILIES 

Under $200 24 

$200 and under $300 105 



$300 
$400 
$500 
$600 
I700 
$800 
$900 
$1,000 
$1,100 



$400. 
$500. 
$600. 
$700. 
$800. 
$900 



.395 
.659 
.509 
.300 
,192 
.III 



$1,200 and over. 



" $1,000 , 95 

" $1,100 62 

** $1,200 24 



86 



Total 2,562 



The proportionate expenditures of these families are : 

per cent. 



For rent 


15.05 


fuel 


5.01 


lighting . 


.90 


clothing . 


15.31 


food 


41.05 


other purposes 


22.68 



Total 



[OO.OO 



I have given these latter details as matters of general 
interest, and as examples of the studies now in progress 
from which we may soon be in possession of such ade- 
quate knowledge of the relative conditions of labor in this 
and other countries as will remove many errors which now 
obscure the discussion of the tariff. 



CHAPTER XXVI. 

In the Matter of Silver, Bi-Metallism, and Free 
Coinage. 

It would not be suitable to leave the subject of Taxa- 
tion and Work after having treated the tariff system only. 
The very worst and most destructive form of tax that can 
be imposed on any community is to tamper with the 
currency and to impair the standard of value. Compared 
to this method of taxing the many for the benefit of the 
few, the tariff sinks into relative insignificance. 

It will not be possible to extend these treatises much 
further. Hence, the only present treatment which the 
v/riter can be permitted to adopt will be to put down a 
series of propositions and interrogatories, to the end that 
each person who gives thought to the subject may des- 
ignate all points of agreement by numbers. These points 
being eliminated, a large part of the apparent complexity 
will be removed, and it may be possible thereafter to 
come to an agreement on the points of difference which 
will be left after cancelling the points of agreement. 

In framing these propositions and queries I have endeav- 
ored to develop the logic of the case upon the basis of 
admitted facts, bearing in mind that all statutes which 
are not consistent with the nature of things must either 
be repealed or become inoperative, else the attempt to 
enforce them will only make disorder. 

205 



206 TAXATION AND WORK, 

1. Gold and silver have become what are known as 
money metals, through a gradual process of natural selec- 
tion subsequently established under forms of law. 

2. Coinage is a process of manufacture ; that is to say, 
a process of converting a definite weight of the pure metal 
of which the coin mainly consists, with a definite propor- 
tion of alloy into a disk, upon which a government stamp 
is put in order to certify its kind, its weight, and its fine- 
ness — in other words, to certify to the quality of the coin. 
That definition exhausts the word coinage. 

3. Coinage has been made a government monopoly in 
order to assure just weight and quality. 

4. The names of nearly all coins can be traced to defi- 
nitions of weight. It is probable that all coins were once 
named in that way so that the name might correspond 
to the weight of metal in them. When subdivided, 
the smaller coins represent aliquot parts of a given 
weight. 

5. The valuation, estimation, or conception of value 
of each coin is first derived from the estimation in which 
a given weight of metal is held in ratio to other things 
that may be exchanged for it. The estimation or value 
of representative or token money rests wholly upon its 
being redeemable or convertible into coin of full weight. 

6. When goods are sold for coined money or its equiv- 
alent, coin is bought ; vice versa, when coin is bought, 
goods or services are sold. It is not necessary that actual 
coin should pass ; instruments of credit serve to give title 
to coin. 

7. A contract to pay one or many dollars is therefore 
a contract to deliver certain things containing a certain 
weight of metal. 

8. A contract to deliver a certain number of gold dol- 
lars is, therefore, a contract to deliver the just weight of 



SILVER, BI-METALLISM, AND FREE COINAGE, 20/ 

gold in the gold dollar. The alloy adds nothing to the 
value. The process of coining merely certifies the coin 
and gives stability to its valuation. 

9. A contract for the delivery of one metal cannot be 
satisfied by the delivery of another metal in any true and 
just sense at any fixed ratio or proportion, because the 
ratio or value of each, as compared to the other, changes. 

10. If it were enacted that dollars were to be made 
only of gold, and that the silver coin which is now named 
a dollar were legally named thaler (from which word the 
word dollar is supposed to be derived), then a contract in 
dollars could only be satisfied by the delivery of gold 
dollars ; a contract in thalers could only be satisfied by a 
delivery of thalers in silver. 

11. Scrip, that is to say, tokens made of paper con- 
vertible into either kind of coin, might be used for small 
change. 

1 2. Under such conditions no act of legal tender would 
be required, except for the perpetuation of evidence that 
either thalers or dollars had been offered in liquidation of 
a contract. 

13. It is not necessary to the enforcement of or prac- 
tice under an act of legal tender that the kind of money 
in which a legal tender is to be made should be specified, 
provided there is but one lawful coin under one name. 

14. A tender of merchandise may be made, but the 
delivery may not be accepted because the quality is not 
what it purports to be, even if there is no dispute about 
the weight. 

15. A delivery of a given number of pounds of cotton 
may be tendered, but if the tender is in troy pounds of 
5,760 grains each, then the tender is not good, the pur- 
chaser being entitled to pounds avoirdupois of 7,000 grains 
each. 



208 TAXATION- AND WORK. 

1 6. By analogy, an act of legal tender may serve its 
full purpose in perpetuating evidence of an offer of deliv- 
ery of money of one kind or another — each kind in lawful 
coin — without enforcing the acceptance of one kind or 
the other. 

17. Let it be assumed that all mints were open to the 
free coinage of gold or silver, without charge for the cost 
of converting the bullion into coin, the dollar of gold being 
established by law of the same weight and fineness as it 
now is ; the thaler of silver being established by law at 
41 2 J grains, nine-tenths fine, corresponding in all but name 
to the present silver dollar. Free coinage would then be 
safe. 

18. Which kind of coin would be the one chosen by 
buyer and seller as the standard of their contracts ? 

19. When contracts in dollars could only be fulfilled 
in dollars made of gold, or multiples thereof, and when 
contracts in thalers could only be fulfilled in silver thalers^ 
would either buyer or seller be likely to make a contract 
in thalers ? 

20. Would silver bullion be brought to the mint for 
conversion into thalers ? Would any bank or banker 
keep a reserve of lawful money consisting of thalers ? 
Why not? 

21. Would it not be because the silver thaler might 
not be equal in value to the gold dollar? 

22. Why not ? Would it not be because the silver 
thaler would not be worth as much after it is melted as 
the gold dollar is worth after it is melted ? 

23. Can a silver thaler of 41 2|- grains, nine-tenths fine, 
stamped with the motto, '' In God We Trust," designated 
one thaler^ be made equal in value to a dollar made of 
gold, by an act of legal tender ? 

24. If a silver thaler cannot be made equal in value to 



SILVER, BIMETALLISM, AND FREE COINAGE. 209 

a gold dollar, how can a silver dollar identical in all re- 
spects, except in the matter of two letters, be made equal 
in value to a gold dollar ? 

25. Can a thing of which the first two letters of the 
name are d oh^ given a value thirty per cent, in excess 
of the same thing under a name of which the first two 
letters are / h ? 

26. Equation: — One thaler of 412^ grains of silver nine- 
tenths fine being worth seventy cents in gold, how much 
is one dollar of 41 2|- grains of silver nine-tenths fine 
worth? 

27. Can you make one dollar of silver of 41 2|- grains 
worth one hundred cents in gold by forcing a creditor to 
take it under the penalty of losing his whole claim if he 
refuses ? 

28. What man of common-sense being in possession of 
capital valued at the standard of gold at one hundred 
cents on a dollar, would lend that capital on credit subject 
to the liability of its being paid in silver dollars or silver 
thalers ? 

29. What does the South need to-day, good credit or 
bad money ? 

30. What is bad money ? Is it not that kind of money 
that is worth less after it is melted than it purports to be 
in the coin ? 

31. A silver dollar is worth less than seventy cents after 
it is melted. Is it good money ? 

32. Can good credit be established on bad money? 

33. There must be a money of redemption. 

34. There must be a standard of deferred payment. 

35. That money must be coin. 

36. That coin must be worth as much after it is melted 
as it is in the coin, provided the government makes no 
charge for coinage. 



2IO TAXATION AND WORK. 

37. All paper representative or token money must be 
redeemable on demand in coin of full value — that is to say, 
in the money of redemption. 

38. The money of redemption must therefore be a 
standard or denominator of all valuations. 

39. The money of redemption must be a standard of 
deferred payment. 

40. International commerce is conducted or nominated 
in terms of money. 

41. Whatever the money of the country from which 
the export is made, or to which the import is directed 
may be, the common denominator or standard of inter- 
national commerce has become the pound sterling. 

42. What is the pound sterling? 

43. There is no coin of that name. It is a simple defi- 
nition or denomination of a given weight of gold. 

44. International commerce is therefore conducted on 
contracts promising payment in terms of weight of gold. 

45. As there is no coin of the name of a pound ster- 
ling, actual balances are discharged by the transfer of an 
equivalent weight of gold in a concrete form. 

46. The coin which is known as the English sovereign, 
when not worn in use, corresponds to the weight named 
pound sterling ; these coins are used in the settlement of 
balances. 

47. In such settlements the sovereigns are customarily 
weighed out and are rarely counted, except in the delivery 
of a small number. 

48. There is no international act of legal tender, there- 
fore contracts in pounds sterling must be liquidated accord- 
ing to the letter of the contract by a just and true weight 
of metal. 

49. International commerce comes to over seventeen 
thousand million dollars a year ($17,000,000,000.00). 



SILVER, BI-METALLTSM, AND FREE COINAGE, 211 

International Imports and Exports. 1890. 

Great Britain and her colonies $6,000,000,000 

Other European countries 8,000,000,000 

South and Central America and Mexico 1,300,000,000 

United States 1,700,000,000 

$17,000,000,000 
(See Statesman s Year-Book.^ 

In the present year the imports and exports of the 
United States may come to $2,000,000,000.00. 

50. If purchases and sales to this amount can be and are 
conducted upon a standard or denominator of weight of un- 
coined gold and without the force of a statute of legal ten- 
der, then it follows that all domestic purchases and sales in 
each and every country could be conducted in the same way. 

51. There is no need of an act of legal tender among 
men who intend to meet their contracts honestly. 

52. It is not necessary that an act of legal tender should 
designate the kind of money in which the tender is to be 
made when each coin is true to its name. 

53. No gold dollars are now coined. 

54. A dollar is now the denomination of a certain 
number of grains of gold. 

55. If there were no other coined dollars and no act 
of legal tender in this country, purchases and sales would 
be m.ade in terms of dollars and accounts would still be 
kept in dollars. Scrip convertible into dollars could be 
issued to fill the place of subsidiary coin. Balances of 
accounts could then be settled in eagles and half-eagles, 
and in tokens of paper convertible in sums of five dollars 
into half-eagles. 

56. In the international commerce between this coun- 
try and Great Britain it is common to ship bars of gold 
in place of coin to foreign countries. The liquidation 
being by weight they serve the same purpose. 



212 TAXATION AND WORIC, 

57. International commerce, nominated and liquidated 
in terms of pound sterling by weight without an act of 
legal tender, is conducted at the least charge for the ser- 
vices of bankers, and is subject to the least burden in the 
settlement of accounts. 

58. International commerce has become adjusted to 
these conditions from choice and not by force of law ; or 
rather by a process of gradual selection, as it became 
manifest that upon the standard of valuation known as 
pound sterling, the safest, surest, and least costly method 
of doing the work would be established. 

59. If such are the facts, then in reasoning upon the 
conduct of domestic commerce, these facts must be 
considered. 

60. From these facts principles may be deduced. A 
principle is " a rule of action among human beings, or an 
admitted truth that requires no further proof." 

61. It is an admitted truth that the practice of nations 
in the conduct of substantially all international transac- 
tions is to denominate these transactions by a valuation 
in pounds sterling ; it is a rule of action among human 
beings to liquidate their international contracts without 
resort to law, except in case of failure or bankruptcy; 
especially without any reference to acts of legal tender. 

62. No one misses an act of legal tender in the con- 
duct of international commerce, because it is an admitted 
truth that requires no further evidence that this form of 
contract by the weight of gold in pound sterling is the 
most beneficial to both parties in all contracts. 

63. If such are the facts in a branch of trade in which 
all men are free to act for their own best interest, by 
what right can any legislator deprive them of their free- 
dom of contract in domestic traffic? 

64. By what right can a legislative body force or 



SILVER, BI-METALLISM, AND FREE COINAGE. 213 

attempt to fdi*ce the circulation of two kinds of coin of 
unequal value, by giving a debtor an option of which it 
deprives the creditor? 

65. Who will trust such a nation? 

66. Who will trust a State which advocates such a 
measure ? 

6'j. Who will trust the citizens of a State by which 
such a measure is advocated ? 

68. What more certain way of destroying credit could 
be devised ? 

69. Credit transactions are in ratio to cash transactions 
as ninety-five or ninety-eight to five or two. 

70. An act of legal tender could only have been 
originally conceived in fraud, when a despotic government 
deprived the lawful coin of a part of its weight, and then 
forced its circulation among the people. 

71. An act for the free coinage of silver dollars of the 
present standard and of full legal tender would correspond 
to such an act of fraud. 

72. If it were possible to impart value to money by 
legislation, why not use paper or leather in place of silver? 

73. The purchase of bullion would be great folly if 
value could be imparted by law to any circulating medium 
without providing for its redemption. 

74 All the present efforts to provide more money 
have been made in this and other countries in past times. 

75. Every project now contemplated by the Farmers' 
Alliances, the fiat-money men, and by the advocates of 
free silver coinage under present conditions, has been 
tried, and it has failed. 

"jd. There would be no surer way to enable the rich to 
pick the pockets of the poor than to pass an act for the 
free coinage of silver dollars at 412^ grains of full legal 
tender at the present time. 



214 TAXATION AND WORK. 

77. Dating from the opening of the gold mines in 
California and Australia about the year 1850, the ratio of 
gold to silver being then one to fifteen and one-half, subject 
to slight fluctuations and variations down to 1873, more 
gold than silver has been added to the monetary stock of 
the world. 

78. In later years the proportionate addition of silver 
has been greater than that of gold. 

79. It may be assumed that both metals have depre- 
ciated ; the one metal gold having become relatively more 
abundant and being more suitable for bank reserves and 
for international transactions has taken the place of silver, 
while silver may be said to have become depreciated from 
the relatively greater abundance of gold. 

80. The use of either metal in actual transactions by 
passing the coin from hand to hand or from place to 
place, has greatly lessened in proportion to the trans- 
actions by the substitution of instruments of credit con- 
vertible into gold on demand. The more intelligent and 
the more united the people of the different sections, 
States, or nations become, the less use they make of the 
actual coin and the greater use they make of bank notes, 
checks, bills of exchange, and other instruments of credit. 

81. The intelligence of a given community may be 
accurately gauged by its banking facilities and by the 
confidence reposed in banks and bankers by the com- 
munity at large, each serving the other. 

82. It is alleged that because prices have been reduced 
in recent years therefore it is proved that gold has be- 
come scarce. Reference being made to the Hamburg 
list of prices, reprinted in Atkinson's Report on Bi- 
metallism (State Dept., 1887) or to Jevons' List of Prices , 
or to the prices of the London Economist^ or to other 
lists, it will appear that the prices of the necessaries of 



SILVER, BI-METALLISM, AND FREE COINAGE. 21 5 

life are even now higher on the average than they were 
prior to 1850, notwithstanding the fact that the cost of 
production and distribution, measured in terms of work 
rather than of money, has been vastly diminished. 

83. Reference being made to the ante-war period in 
this country, 185 7-1 860, it may be held that through the 
introduction of machinery and the application of science 
and invention, the people of the United States can now 
produce and distribute one-third to one-half more of the 
necessaries and comforts of life, applying thereto less 
work, both measured by hours and the intensity of the 
effort, than in 1857 to i860. Hence lower prices. 

84. Had lower prices been due to a scarcity of money 
or a scarcity of gold, the wages or earnings of labor would 
also have been reduced. The wages or earnings of labor, 
measured either in terms of gold or its equivalent or in 
what money will buy, are now higher than they ever were 
before in this or any other country. 

85. There have been some diiificulties about the supply 
of actual money, and there may now be sections in this 
country where coin or paper money is not supplied in 
sufficient measure to serve the use of the people. This 
may be attributed to restrictive legislation upon banking 
and to the limitations of the National Bank Act ; or else 
to the tax upon bank-note circulation. 

86. There are some indications of a general character 
which may to some extent show why there may have 
been a local scarcity either of actual money or of the 
instruments of exchange or credit, which serve as money 
— especially in the Southern States — even though the 
volume of circulating medium in coin, notes, or certifi- 
cates is now very large — larger than for many years. 

87. In the year 1882 the actual tons (disregarding frac- 
tions'^ moved over the railways of the United States 



2l6 TAXATION' AND WORK, 

numbered 361,000,000. Each ton was moved an average 
haul of 109 miles. The number of tons hauled this dis- 
tance for every man, woman, and child of the population 
averaged 6.83, equal to 13,660 pounds. The charge for 
this service came to $9.20 for each person. 

88. In the year 1890 the tons moved numbered 701,- 
000,000. Each ton averaged 113 miles' haul. The number 
of tons hauled 113 miles for each man, woman, and child 
of the population was 11.22, equal to 22,440 pounds. The 
charge to each person for this service was $10.56. Had 
the charge per ton per mile been as high in 1890 as it was 
in 1882 the service of the railways on freight charges only 
would have cost the people $238,000,000 in excess of 
what it did cost them. 

89. The population increased a fraction over eighteen 
per cent, between those two dates, but the railway-freight 
traffic increased a fraction over sixty-four per cent. The 
additional quantity moved was 340,000,000 tons of food, 
fuel, fibres and fabrics of all kinds, hauled 113 miles. If 
valued as low as twenty dollars a ton these figures represent 
an increase in the business transactions on one single ex- 
change, to an amount only a little short of seven billions 
of dollars ($7,000,000,000). The average value is probably 
above twenty dollars per ton. 

90. Banking facilities have not increased in anything 
like a due proportion ; therefore a heavier work has been 
thrown upon the circulating medium. Therefore notes, 
silver certificates, and other instruments of credit have not 
come in rapidly for redemption, because they were re- 
quired for daily use. So long as all were directly or 
indirectly convertible into gold, parity with gold has been 
maintained. 

91. It is manifest, however, that no increase either of 
coin, bank notes, certificates, or other similar instruments 



SILVER, BIMETALLISM, AND FREE COINAGE. 21/ 

of credit, of one, two, five, or ten dollars, can begin to 
meet the requirements of such an enormous increase of 
traffic. It follows, therefore, that any restrictive legisla- 
tion upon banking should be removed. 

92. The tax upon the circulation of State bank notes 
may safely be removed. The present period differs wholly 
from the period known as " wild cat banking." There is 
now an ample supply of coin or other lawful money for all 
interstate transactions or exchanges, and for the use of 
travellers ; enough to remove all fears of the former diffi- 
culties of obtaining money at par when moving from 
city to city, or from State to State. 

93. State banks of issue may now be safely organized 
for granting credit in the locality where they are estab- 
lished, or within which their notes may circulate. 

94. It will become the duty of each community to 
establish the credit of its own banks, and to assure the 
redemption of notes in the most certain manner, else 
they will neither circulate in that locality nor anywhere 
else. 

95. Suitable conditions for the organization of banks 
may be established among the citizens of each city, each 
county, each township, and each town. In sections where 
banks and bankers are looked upon with distrust, money 
will be scarce and credit will continue to be lacking. 
In sections where the actual benefit of banking is recog- 
nized, and where sound banks are established, money 
will be plenty, provided its absolute redemption in coin 
of the highest standard is assured under the laws of the 
State in which such banks may be organized. 

96. Under such conditions, wherever there are com- 
modities to be moved there will be plenty of money to 
move them. Where the quality of the money is abso- 
lutely assured, the quantity will adjust itself to the spe- 



21 8 TAXATION AND WORK. 

cific need of each intelligent community, and there will 
always be enough. 

97. When the credit of the money itself is impaired, 
neither banks nor bankers can serve the community. 

98. When the dollar of the United States is as well 
established and its credit is as well assured as that of the 
pound sterling of England, the commerce of the United 
States will assume such proportions as its system of duties 
upon imports will permit. Its possible magnitude cannot 
be determined while our money is liable to discredit, and 
our tariff obstructs imports. 

99. The propositions submitted in this treatise have 
reference to existing conditions. What the effect of a 
treaty of international legal tender for the common use 
of gold and silver, interchangeable at a specific ratio of 
weight, might have upon the value or estimation of these 
metals must remain to be proved, if such a treaty can be 
made. 

Until then, so long as there is no international treaty, 
and so long as all international commerce, including that 
of the United States with other countries, is denominated 
in pounds sterling, this country among all others has the 
greatest possible selfish interest in adhering strictly to the 
gold standard, because the price of all its principal pro- 
ducts is determined by what the excess that cannot be 
consumed at home will bring, either in the home market 
on sales made for export, or what it will bring in the for- 
eign markets to which it may be exported. The excess 
of our exports of cotton, grain, oil, and other commodities 
to Great Britain over imports therefrom exceeds $250,- 
000,000 a year in gold valuation. If we need gold more 
than we want the merchandise against which we draw 
drafts in pounds sterling upon that balance, we may de- 
mand gold to the extent of our requirements. 



SILVER, BI-METALUSM, AND FREE COINAGE, 2I9 

If we did not stop the product of our silver mines, 
nominally worth $70,000,000, in fact worth about $50,000,- 
000, by piling it up in our Treasury, the export of that 
silver at its market value, whatever that might be, would 
be added to our gold resources. 

The gross product of this country comes to between 
twelve and thirteen billion dollars on a gold valuation. 
The little petty product of the silver mines bears the 
ratio to our total product of twelve hundred and fifty 
dollars to five dollars. Under the pretext of protection 
to this unprofitable branch of industry — against the judg- 
ment of all the intelligent advocates of an international 
bi-metallic treaty, the free coinage of silver is urged. The 
commerce of this country has been endangered and the 
credit of the country has been imperilled by this proposal. 

100. When Free Trade, qualified only by the necessity 
of collecting a moderate revenue from duties imposed for 
that purpose, shall have been established, and when our 
international commerce is conducted by the standard of 
the given weight of gold, which is contained in a dollar 
made of gold, without danger of that standard being im- 
paired, the centre of the commerce of the world may be 
changed from London to New York. 



CHAPTER XXVII. 

Volume of Trade. 

In dealing with our monetary system it becomes expe- 
dient to attempt to establish the data of the huge volume 
of transactions which are conducted in terms of money 
within the limits of our own country, in a tolerably certain 
manner, since any legislation, beneficial or otherwise, will 
affect these transactions throughout the whole circulation. 
All purchases and sales imply the use either of actual 
money or of checks, bills of exchange, or other instru- 
ments of credit. The one is the shadow of the other, 
inseparable from it. 

One method which I have adopted has been to attempt 
to value the merchandise which has been moved by the 
railways. There are no data for the exact computation 
of the average valuation of the goods, wares, and mer- 
chandise which are moved over the railways of this coun- 
try, yet one can obtain an approximate estimate in the 
following manner. The lowest-priced products are per- 
haps moved the longest relative distances, but as a rule 
they are loaded upon the cars and moved but once 
because they will not bear the cost of handling. The 
articles which are below the value of twenty dollars per 
ton consist mainly of ores, coal, and stone. Our total 
annual output of coal, of ores, of iron, of limestone used 
as a flux in smelting, and of building stone, comes to 

220 



VOLUME OF TRADE. 221 

about two hundred million tons. A considerable part of 
the coal is used where it is mined, and a large part of the 
ores with another part of the coal is moved by water- 
ways, the rest is moved by railways. 

Of the total tonnage moved by rail in 1890 covering 
seven hundred million tons, one may assume that one- 
quarter part consisted of ores, coal, and stone, at a valua- 
tion of two or three dollars per ton, amounting in value to 
less than four hundred million, — probably about three 
hundred million dollars. 

On the other hand, if we compute the movement of 
cotton by rail, the movement of wool, both domestic and 
foreign, by rail, and the movement of hemp, sisal, and 
other fibres which are converted into cordage, twine, flax, 
and other fibrous substances, these fibres only would reach 
a tonnage of about two and a half milHon tons, of which 
probably two million tons are moved by rail. The value 
of the wool is from twenty to thirty cents per pound, of 
cotton seven to nine cents, other fibres varying greatly. 
It is probable that the total value of these fibres would 
very nearly equal that of the coal, ore, and stone, even 
before they are converted into their secondary forms. If 
moved again after their first conversion they would come 
to a very much greater sum. 

Having dealt in this valuation only with coal, ores, 
stone, and fibres, we have computed the value of less 
than one-third the actual tonnage of the railways, leaving 
the products of the forest and of the field still to be 
dealt with. 

There is no exact measure of the product of the forest. 
A ton of wood will cover from two to three thousand feet, 
board measure, — more or less according to the kind of 
timber. Sawed lumber is worth from ten to sixty dollars 
per thousand feet, board measure. Therefore the products 



222 TAXATION AND WORK, 

of the forest, even in their crude condition, may vary in 
valuation from thirty to one hundred and fifty dollars 
per ton. 

Food products, however, constitute the larger element 
in the railway traffic, as they do in the family expenses. 
An average grain crop weighs one hundred milhon tons ; 
corn is worth fifteen to twenty dollars per ton ; wheat, from 
twenty to twenty-five ; oats, from twenty to twenty-five ; 
meats on the foot, from eighty to one hundred dollars ; 
meats dressed or packed, one hundred and fifty to two 
hundred dollars ; cheese, one hundred and sixty to two 
hundred and fifty ; butter, four hundred to six hundred, 
and so forth. 

Thus far we have dealt only with crude materials of 
various kinds, and with some forms of food in condition 
ready for consumption. The only clue that we have for 
obtaining the exact value of this class of substances is 
from the figures of the tonnage moved over the Erie 
Canal. Under the rules of the State all products moved 
on the canal are valued. They consist mainly of the 
lower-priced, cruder, and heavier substances. The average 
value is thirty-three dollars per ton. 

In dealing with the railway traffic it would be useless to 
attempt to compute the value of most of the secondary 
products or any of the final forms named manufactures, 
such as flour, bread, canned provisions, fish, fruits, 
machinery, leather, boots and shoes, hardware, clocks 
and watches, and all the protean forms of finished goods 
in which nothing can be found of any weight to which 
any consideration is due, that is worth less than twenty 
dollars per ton ; while great quantities range from two 
hundred to two thousand dollars per ton, or even more. 

On the other hand, in dealing with the raihvay traffic 
there is no means of telling how many times the same 



VOLUME OF TRADE, 223 

ton is repeated, or how many times the same lot of flour 
or other commodity may be reported in the way from 
Chicago to the sea, by the different corporations that 
make returns. On the whole, however, the largest trafific 
is over the ways of the largest corporations that make but 
a single return covering a very long distance. The average 
haul per ton in 1890 was one hundred and thirteen miles. 
It may be assumed that most of the heavy and very crude 
substances, such as ores and stone, are reported but once. 
It is probable that the greater part of the grain is reported 
but once, as it is carried to the mill on through lines. 
Secondary products may be reported more than once, 
therefore the actual number of tons moved by rail may be 
less than the apparent number reported ; but, on the other 
hand, the value which has been put on these secondary 
products is very far below the true value, and the valua- 
tion of twenty dollars ($20) per ton on finished products is 
very greatly below the average. 

Mr. H. V. Poor, the author of The Railway Manual, 
has given close attention to this subject, working by 
different methods from the ones which I have employed, 
and he has reached the same conclusion, to wit : that the 
minimum value of all the goods, wares, and merchandise 
moved over the railways of the United States is twenty 
dollars per ton. 

In view of these considerations one may submit as a 
fact that the actual tons moved in 1890, as listed in The 
Railway Manual, computed at 700,000,000 tons, moved 
one hundred and thirteen miles, possessed a value of not 
less than twenty dollars per ton, or fourteen thousand 
million dollars ($14,000,000,000) in all. This merchandise 
was probably worth a great deal more than that sum, and 
this is the measure of only that part of the exchange of 
goods, wares, and merchandise which is worked by the 



224 TAXATION AND WORK. 

railway system. In each exchange in terms of money, 
coin, notes, checks, or bills of exchange must pass. 

There are other methods of dealing with the same sub- 
ject, leading up to the conclusions which it is necessary 
to reach in order to comprehend the full bearing of our 
monetary system. If we should compute the product of 
the people of this country at two hundred dollars' worth 
per head, or at six hundred dollars' worth as the average 
product of each one in three of the population who is 
occupied for gain, — our gross product comes to twelve 
thousand five hundred million dollars' worth at the places 
of final consumption ($12,500,000,000). It is probable 
that five hundred million dollars' worth may be consumed 
at the place of production ; all the rest is bought, sold, or 
exchanged once, twice, thrice, or more. All the rest is 
moved by lake, river, rail, wagon, or by hand once, twice, 
thrice, or more, and every transaction is conducted in terms 
of money. Grain and meat are sold by the farmer to the 
miller or the packer ; moved to the elevator, to the flour- 
mill, to the creamery, or the packing-house ; moved again 
to the wholesale dealers, and again to the distributors. 
Fibres are removed from the field to the factory, from the 
factory to the bleachery, from the bleachery and dye- 
house to the clothier ; moved again to the great centres 
of distribution, and moved again to the place where they 
are finally sold. Even in the process of conversion into 
clothing, fabrics are cut in the cities and are moved 
hundreds of miles to be sewed into garments in farmers' 
families and returned. Metals are moved from the furnace 
to the machine-shop and to the tool factory, and from 
thence, once, twice, or many times. In every movement 
there is purchase and sale conducted in terms of money. 

All that we can do is to move something ; we can make 
nothing. The work of life is a conversion of force, of 



VOLUME OF TRADE. 225 

which the end Is to supply to each man, woman, and child 
with from two and one-half to five pounds of food a day, 
with from ten to twenty pounds of cotton or wool a 
year for our^backs, with a few boards over our heads 
for a dwelling-place. Food, shelter, and clothing? What 
else can the richest man consume ? What else will satisfy 
the needs of the poorest ? There may be relative and 
very great inequality in the distribution of the necessaries 
of life, but there must be substantial equality in the con- 
sumption of the materials by which we exist. The greatest 
inequality is in the provision for shelter. How to house 
the crowds in the great cities is the hardest problem which 
we are called upon to solve. 

If then we may value the product as stated, — if we 
may compute the whole exchange by railway at the sum 
given, — it would seem that the measure of all our business 
transactions in purchases and on sales or exchange of 
product for product, all of which must be stated and 
measured in terms of m.oney, cannot come to less than 
forty thousand million or forty billion dollars in a year 
($40,000,000,000). All these dealings imply delivery of 
goods by water-ways, by railways, by wagon, and by hand ; 
heavy products by water-ways and railways, — package 
and wholesale distribution mainly by railway, — parcel 
delivery by wagon or by hand costing more than either 
of the other methods. It costs as much for the parcel 
delivery of a loaf of bread in cities as it does to raise the 
wheat, mill it, and move it to the bakery and convert it 
into bread. 

If the measure of all business transactions is forty 
billion dollars, that part which is reported in the railway 
traffic must come to more than one-third or more than the 
fourteen billion dollars at which I have computed it. In 
every one of these transactions In the actual things that 



226 TAXA TION AND WORK. 

are required to support life, the shadow passes with the 
substance. Money of some kind, a promise of money, 
or a representative of money of some kind, goes with 
each purchase and each sale. 

In dealing with our monetary system, legislators touch 
the very nerve-centre of this immense volume of mutual 
services. It is computed that ninety-five per cent, at least 
of these purchases and sales are liquidated by the use of 
symbols or notes, — by checks, bills of exchange, and other 
instruments of credit. 

Again, we may add to this great volume of trade in the 
necessaries of life the transactions in real estate, stocks, 
bonds, and professional services. All of these transactions 
— with very rare exceptions — are liquidated by checks or 
other instruments of credit. Again we may reach some 
conception of the magnitude of our transactions from the 
figures of the bank clearing-houses. The annual volume 
of the whole traffic in goods,wares, real estate, and securi- 
ties cannot be less than one hundred and fifty thousand 
milHon or one hundred and fifty billion dollars ($150,000,- 
000,000), and may be more. To any one to whom these 
figures carry any conception of the functions of money, 
the paramount importance of the quality of our coin, 
rather than its quantity, becomes apparent. 

At the instance of the representatives of the little petty 
product of our silver mines, which is worth only fifty 
million dollars in fact, but for which the owners wish to 
get seventy million at the cost of the tax-payers, there 
has been great danger that this whole volume of 
transactions might be thrown into disorder and confusion. 

It is extremely difficult, however, to reason on these 
huge amounts ; we must bring the measure of all these 
transactions down to the unit of the family. We have 
computed our product at two hundred dollars per head, 



VOLUME OF TRADE. 22/ 

which is very near the mark. From this product, what- 
ever it may be, all wages, earnings, profits, rents, interests, 
taxes, and stealings are derived. These are the divisions 
or shares into which these products are converted in terms 
of money in the processes of exchange by purchase and 
sale. If this is the measure of all there is, then it follows 
of necessity that by so much as some may secure more, 
others must secure less. One in three of our population 
is at work for gain ; the average family numbers five. 
The incomes of by far the greater number of the families of 
this country (five in number per family) are less than one 
thousand dollars ; it is probable that the incomes of more 
than one-half of the population of this country are less than 
from six hundred to eight hundred dollars a year for each 
family group of five persons. 

If my computation of the trade and commerce of this 
country in the necessaries and comforts of life is approxi- 
mately correct, i. e,, if each article is bought and sold 
three times on its way from the original producer to the 
consumer, then the transactions or purchases and sales 
are more than three times the value of the total product. 
If this will be admitted, it follows that the food, fibres, and 
fabrics on which a family spending six hundred to eight 
hundred dollars a year is supported, will correspond to 
sales amounting to two thousand dollars or more in each 
year. 

More than ten per cent, of all who are occupied for gain 
or engaged in the services of the community are occupied 
in the mere processes of trade and transportation. The 
merchants, tradesmen, draymen, the clerks, the railway 
employees, and the salesmen occupied at the present time 
number at least 2,400,000 persons out of a total of 23,- 
000,000 who are now occupied for gain, and upon whose 
work the subsistence of 65,000,000 depends. 



228 TAXATION AND WORK, 

Since January ist, 1879, "^ this work has been compu- 
ted by the standard of the lawful unit of value of a 
dollar made of gold. Under the pretext that the prices 
of the necessaries of life are now so low as not to leave a 
sufficient profit to those who control the work of produc- 
tion and distribution, an attempt is now being made to 
increase the volume of money in circulation by the free 
coinage of silver dollars, which are worth less than seventy 
cents on a dollar in gold. By such an act our standard 
of value would be changed, gold would be driven from 
circulation, and the whole volume of transactions would 
require are-adjustment in order to bring it to an uncertain 
and variable silver unit in place of the established gold 
unit of value. 

This act is advocated without regard to the concurrence 
of other nations, and without regard to the relations of this 
country to international commerce. 

The promoters of this act overlook the fact that while 
prices have fallen since the specie standard of payment was 
re-established on January ist, 1879, ^^ wages of labor 
have constantly risen, subject to occasional small fluctu- 
ations. It is for the benefit of the workmen that prices 
should be kept down so long as wages mount higher and 
higher, until they are now higher than they ever were be- 
fore. So long as products increase in ratio to consump- 
tion, it is not true that the profits are insufificient. Our 
product has increased in the period that has elapsed since 
1879 I'l^oi'e rapidly than it ever did before. Shall legisla- 
tors be permitted to retard progress both in profits and 
wages ? The maintenance of the rate of wages depends 
upon the established credit of the unit of value being un- 
impaired ; on the stability of our unit of value without 
disorder and without discredit depends the continuance 
of this vast volume of transactions in which every family 



VOLUME OF TRADE, 229 

spending from six hundred to seven hundred dollars per 
year has a special interest to the amount of two thousand 
dollars' worth of purchases and sales. The unit of value 
must be maintained to do this work. 

The effort to deprave the currency has already caused 
a check to production and has impaired wages. 

It is possible that such an act may pass the Congress 
of the United States, but upon the instant that the de- 
preciation begins and credit is shaken, or at the very 
instant when gold goes to a premium of only one per cent., 
the free coinage of debased dollars will be stopped, what- 
ever party may be in power. The mass of the people will 
insist that the present standard of value shall be main- 
tained, and the credit of our coined money shall all be at 
par. They will not submit to use any coin that is worth 
less than seventy cents as compared to the gold dollar, or 
its equivalent, in which their wages are now paid. 

The masses of the people will not submit to the free 
coinage of any kind of a dollar of which the metal is not 
worth as much after it is melted as it purports to be in the 
coin. The classes who would mislead them for the private 
benefit of the owners of the silver mines will be swept 
away like chaff before the cyclone. A tax imposed upon 
the working people of this country for the benefit and 
profit of a few capitalists, whose gains are only to be 
secured by raising the prices and lowering the value of 
wages, will not be submitted to for a single day after 
the fraud is exposed. 

In conclusion of this branch of the subject, it may be 
remarked that while the measure of all our transactions, 
purchases, and sales, may come to forty billion dollars a 
year ($40,000,000,000), the measure of our exports and 
imports in 1890 amounted to seventeen hundred million 
dollars ($1,700,000,000) in 1890. In the last fiscal year, 



230 TAXATION AND WORK:, 

owing to our excessive exports of food products to meet 
the scarcity in Europe, exports and imports combined 
may come to two thousand milHon dollars ($2,000,000,000) 
or two billion. If each subject of export and import is 
dealt in three times, then the volume of transactions cor- 
responding to our foreign traffic would be six billions in a 
total of forty billions of foreign and domestic trade com- 
bined, or fifteen per cent. 

The attempt has been made to bring into conspicuous 
notice the vast volume of our domestic traffic as compared 
to our foreign trade, yet the advocates of McKinleyism 
venture to impute the increasing welfare of this country 
to the obstruction of imports under the McKinley tariff 
act. It may be admitted that in spite of this obstructive 
measure the people of this country prosper, but our prog- 
ress is like that of a strong man into whose boot a 
McKinley pebble or projecting shoe peg has been driven ; 
it makes him halt and lag behind in the race instead of 
leading, but does not prevent him from making progress. 
Foreign debts and armies are greater obstructions to the 
progress of our competitors, and these may be a greater 
burden than even a tariff as obstructive as the McKinley 
tariff act. 

It is singular that the very same persons who ask for 
greater appropriations for improving our rivers and har- 
bors, in order to facilitate the transportation of our goods 
and wares, and who ask for subsidies and bounties for 
steamships in order to communicate with foreign coun- 
tries, and who in every other way attempt to remove the 
obstructions to commerce, have yet raised an obstruction 
to foreign commerce higher and higher by the way of 
prohibitive duties upon the goods which are the only 
means of payment for our own commodities. Our com- 
merce, however, goes on in a lame and halting way in 



VOLUME OF TRADE. 23 1 

spite of measures which often work the very reverse of 
what was intended by them, as in the case of the duties 
upon wool, inviting larger imports at higher cost in place 
of benefiting the domestic wool grower. 

It is remarked in Motley's History of the Netherlands 
that throughout their long and bitter struggle with Spain 
the Dutch maintained free commerce with all the world, 
raising their revenue by taxes which at one time were 
said to have taken one-half the product of the country, 
yet at the end they came out strong and rich, '' and while 
producing not one single grain of wheat they yet ate the 
whitest bread in Europe." 

England has become the great centre of the world's 
commerce, and London has become the monetary centre 
and clearing-house of the world, under two conditions : 
namely, first, the free import and the free export of all 
commodities that are manufactured or produced, subject 
only to a tariff for raising a moderate sum from duties 
upon the import of spirits, wines, liquors, tobacco, spices, 
and fruits. Second, London has become the monetary 
centre and clearing-house of the world's transactions be- 
cause of the superiority and safety of its unit of value. 
That unit of value consists of the grains of gold which 
are nominated pound sterling, and which can be delivered 
in EngHsh coined sovereigns only when such coins are of 
full weight. 

Were equal facilities for commerce and equal assurance 
of the stability of our standard of value granted and 
given by the United States, the centre both of the world's 
commerce and of the clearing-house of nations might be 
transferred to this continent. 

So long as the McKinley act remains in force and so 
long as there is a shadow of doubt as to the stability of 
our unit of value, this change cannot occur. As the 



232 TAXATION- AND WORK. 

Dutch, producing not a grain of wheat yet ate the whitest 
bread in Europe, so the people of the United States may 
command the gold of the world, even if not a single 
dollar's worth were produced in our own mines, when- 
ever we will. 

The estimates of the revenue from liquors, tobacco, and 
miscellaneous permanent receipts presented in the early 
chapters, have been justified by the government receipts 
for eleven months of the present fiscal year. They will 
sufifice to cover all expenditures except pensions, so far 
as one can now tell. They may suffice next year if 
excessive appropriations are not made for rivers and 
harbors and other purposes which are wholly within the 
control of Congress, and if the purchase of silver bullion 
is stopped — not otherwise. 



CHAPTER XXVIII. 
Taxation by Bad Money. 

Since the two foregoing chapters on our monetary 
system were completed I have received John Henry 
Norman's book upon The World's Exchanges^ published 
by Sampson Low, Marston, & Co., London. 

In this work simple rules are given for computing the 
relative value of all the coins of the world by the relative 
weight in grains of pure gold or pure silver in each coin. 
That is manifestly the only true method of determining 
their value, as the proportion of alloy in each coin varies 
in different countries. 

For instance, the gold dollar of the United States, 
which is the lawful unit of value, weighs twenty-five and 
eight-tenths grains {2^^-^, but it consists of nine parts of 
pure gold and one part of alloy ; the coin is nine-tenths 
fine, it therefore contains twenty-three and twenty-two- 
hundredths grains (233^^) of pure gold. 

The English pound sterling is a name or definition of 
the weight of one hundred and thirteen grains and a very 
small fraction (113.0016) of pure gold. The coin named 
sovereign, which is the equivalent of the pound when of 
full weight, consists of 916.667 parts of gold and 83.333 
parts of alloy, the coin being seven-eighths fine. 

The alloy in the coinage of other countries varies in some 
cases from either standard, therefore in order to ascertain 
the relative value of any coin the computation of the 
value for such comparison must be made by the relative 
weight of pure metal. 

The elements of weight and valuation are inseparable ; 
there is no method of comparing value except by weight, 

233 



234 



TAXATION AND WORK, 



and no act of any country can change or alter the value 
of a coin except by adding to or taking off a part of the 
pure metal. 

This computation I have tabulated from Norman's work, 
and the tables below have been carefully corrected by him. 

It would be well that the following tables should be 
officially verified by the officers of the United States Mint, 
or that corresponding tables should be given if the com- 
putations have already been made. I am not aware that 
any such tables exist.' 

Gold coins named in Norman's work, with weight of 
pure gold in each stated in troy grains, and relative value 
as compared to the gold dollar of the United States : 



Country. 



United States 



2. 

3. 
4. 

5. 
6. 

7. 

8. 

9. 
10. 

12. 
13- 
14. 
15. 
16. 

17. 
18. 
19. 
20. 
21. 
22. 

23. 
24. 



Great Britain.. 

France 

Germany 

Netherlands. . . 
Denmark. ... 

Austria 

Russia . 

Turkey 

Portugal 

Egypt 

Mexico 

Cuba 

Chili 

Brazil 

Peru 

Uruguay 

Argentine 

Japan 

Philippines . . . 

India 

Persia 

Tunis 

Newfoundland 



Name of coin. 



Dollar.... 
Dollars .. 
Dollars . . 
Sovereign. 

Francs 

Marks 

Guilders. . 
Crowns . . . 
Florins. . . 
Roubles . . 
Pound. . . . 
Milreis. .. 
Pound, . . . 
Pesos . . . . 

Peso 

Pesos . . . . 
Milreis. . . 

Sols 

Pesos . . . . 
Dollars . . , 

Yen 

Peso 

Rupees.. . 
Thoman. , 
Piastres . . 
Dollars . . , 



Grains of 
pure gold. 



23. 
116, 
232. 
113, 

89, 
no, 

93 
124, 
89, 
92 
102, 
125, 
114 

365 
21, 
105. 
126, 
224, 
120, 
112 

115 

22 
165. 

52. 
135. 

47. 



21997 

09985 

19970 

0016 

60701 

6268 

45985 

45418 

60701 

57403 
0804 

4425 

7781 

45753 

5019 

92533 
81996 

01753 

0750 

00875 

74262 

83705 

0000 

96536 

55776 

07895 



Relative 
value. 



$1.00 

5.00 
10.00 

4.866 

3.859 
4.764 
4.025 
5.360 

3.859 
3.986 
4.396 
5.402 
4.943 
15.739 

.926 
4.562 
5.461 
9.647 
5.170 
4.825 
4.984 

•9834 
7.106 
2.281 
5.838 
2.027 



' See tables compiled by Mr. E. O. Leech, Director of the Mint, on pages 
236 and 237, which have been recently added. 



TAXATION BY BAD MONEY, 



235 



Silver coins named in Norman's work, with weight of 
pure silver in each stated in troy grains, and relative 
value as compared to the silver dollar of the United States 
of 41 2|- grains nine-tenths fine, 371.2514 pure ; also their 
relative value in gold at the present price of silver bullion. 



Country. 



I. 
2. 
3. 
4. 

5. 
6. 

7. 
8. 

9. 
10. 
II. 
12. 

13. 
14. 

15. 
16. 

17. 
18. 
19. 
20. 
21. 
22, 

23- 
24. 

25. 
26. 

27. 
28. 
29. 



United States. . 
Great Britain, . . 

France 

Germany 

Netherlands. . . . 

Denmark 

Austria 

Russia 

Turkey 

Portugal 

Egypt 

Mexico 

Cuba 

Chili 

Brazil 

Peru 

Uruguay 

Argentine 

Japan 

iPhilippines .... 

India 

Persia 

Tunis 

Newfoundland.. 

Java 

Tripoli 

Siam 

Shanghai, China 
China 



Name of 
coin. 



Grains of 
silver. 



Dollar 

Shilling 

Franc 

Mark 

Guilder 

2 Crowns 

Florin 

Rouble 

20 Piastres 

5 Testoons 

Pound 

Dollar 

Dollar or peso 

2 Milreis 

Sol 

Peso 

Dollar or peso 

Yen 

Dollar 

Rupee 

Kran 

Piastre 

Half dollar . . 

Dollar 

Mahbub 

Tical 

Trade dollar. 

Tael — weight 

not a coin. 



371-2514 
80.72937 

69.4455 
77.1617 

145.8357 
185.1882 
171.4703 
277.7221 
308.1168 
176.8284 
173.6139 
377.0586 

347.2278 
360.7311 
347.2278 
347.2278 
347.2278 
374-40 
360.5614 
165.0000 
63.0316 

43.0145 

168.1871 

376.1434 
313.2101 
206.2850 
378.0000 

513.0572 



Relative 

value in 

silver at 16 

parts of 
silver to i 
part of gold. 



$1.00 
.2174 
.18705 
.20784 
.3928 
.4988 
.4618 
.74807 
.8299 
.4763 
.4676 
1. 0156 

•9352 
.9716 
.9352 
.9352 
.9352 
1.0084 
.9712 

•4444 
.1697 
.1158 
.4532 

1.0113 
.8434 
.5556 

1. 0182 

1. 3819 



Value at 
30 per cent, 
discount in 

ratio to 
gold. 



.70 

.1522 

.1310 

.1456 

.2751 

.3493 

.3235 

.5240 

.5910 

.3337 
.3276 
.7127 

.6551 
.6805 

.6551 
.6551 
.6551 
.7060 
.6804 
.3111 
.1190 
.0813 
.3173 
.7093 
.6910 
.3892 
.7128 

.9673 



" The above silver equivalents are found by dividing the grams of pure 
silver in each money of current in the large table of the Guide by 24.0567 
grams."— J. H. N. 



236 



TAXATION AND WORK. 



In making these tables through the aid of Mr. Norman I was 
not aware that a similar valuation had been made by Mr. Edward 
O. Leech, Director of the Mint, which is to be found in Johnson's 
Encyclopaedia, edition of 1888, Vol. II., pages 144-146, under the 



TABLE OF FOREIGN COINS. 
Gold. 



Countries. 



Argentine Republic 

Austria-Hungary 

Bolivia 

Brazil 

Bulgaria 

Central American States 

Costa Rica 

Guatemala 

Honduras 

Nicaragua 

Salvador. 

Chili... 

Colombia 

Cuba 

Equador 

I'gyp^; 

!• inland 

German Empire 
Great Britain... 

Hayti 

India 

Japan 



Latin Union 

(Belgium (francs) 
France " 
Greece (drachmas) 
Italy (liras) 
Switzerland (frs.). 

Mexico 

Netherlands 

Persia 

Peru 

Portugal 

Roumania 

Russia 

Scandinavian Union 

Denmark 

Norway 

Sweden 

Servia 

Spain 

Tunis 

Turkey 



Venezuela. 



Standard. 



Double...... 

Single Silver 
Single Silver, 
Single Gold,. 

Double 

Single Silver 



Double.. 

" Silver 

" Gold 

'' Silver 

" Gold 

" Gold 

" Gold 

" Gold 

•' Gold 

" Silver 

Double (practically 

Single Silver) 

Double 

It 

Single Silver 

Double 

Single Gold (recent). 

" Silver 

" Gold 

Double 

Single Silver 

Single Gold ,,.. 

Double 

" (practically 

Gold) 

Single Silver 



Denomination of Coins. 



Argentine 

(8 Guldens) 8 Florins.... 

Onza 

20 Milreis 

Alexander (20 Leii) 

f Onza or Doubloon 
( coined prior to 1870. 



^O 



j 20 Pesos, coined 

I since 1870 

Condor 

Double Condor 

Doubloon (Isabella)... 

Double Condor 

Eg'y Pound 

20 Markkaa 

Double Crown (20 marks) 

Sovereign 

10 Gourdes 

Mohur (15 Rupees). . 



Yen 

100 francs. 

50 francs. 

20 francs. 



Peso 

ID Florins 

2 Tomans 

20 Sols 

Crown ( 10 M ilreis) 

20 Leis 

Imperial (10 Roubles). 

20 Kroner 

ID Kroner 



Milan (20 Din.nrs). 

25 Pesetas 

100 Piastres 



500 Piastres . 
100 Bolivars. 



124.451 
99-56 
385.800 
276.695 
99-56 

417.590 



497. 80C 

235-384 
497.806 
129.538 
497 . 800 
131. 172 
99-56 
122.915 
123.270 
248 . 903 
180.000 



25.720 
497 . 806 
248 . 903 
99.561 
49.780 
24.890 

26.111 
103.703 

87.962 
497.806 
273.686 

99.561 
199-133 
138.280 

69.140 



99.561 
1-^4-451 
300.924 

556.817 
497.806 






900 
900 
900 
9i6§ 
900 

875 



900 

900 
900 
900 
900 
875 
900 
900 
916! 
900 
9i6§ 

900 
900 
900 
900 
900 
900 

875 
900 
900 

900, 
916S 
900 
900 
900 
900 



2-0 



(u 2 c 



900 
900 
900 

916s 

900 






365.390 



448.025 

211.845 
448.025 
116.584 
448.025 
"4-775 
89.605 
110.623 
113.000 
224.012 
165.000 

23.148 
448.025 

24.0 
289.605 

44 . 802 

22.40 

22.847 
93-332 
79 . 1 66 
448.025 
250.878 
89.605 
179.219 
124.452 
62.226 



89.605 
112.006 
270.831 



006 $4.82.3 
605 3-85-9 
220 14.95.4 



10.92.3 
3.85.9 

15.73.6 



19.29.5 



76-4 
86.65 
64.7 
10.6 



-99-7 
9-29-5 
19.64.7 

.85.9 

1.92.9 

.96.4 

.98.4 
4.01.9 

3-40.9 
19.29.5 
10.80.4 

3-85-9 
7.71.8 

5-35-9 
2.68.0 



3-85-9 
4-82.3 
1.66.4 



510.416 21.98.2 
448.025 19.29.5 



TAXATION BY BAD MONEY. 



■n 



:icle '' Coinage." From this table compiled by Mr. Leech, con- 
nsed tables have been prepared, which are given below, giving 
t value, as estimated by him, of the principal coins mentioned 
Mr. Norman, in which some slight variations may be found 
>m the previous tables, and some further valuations are added. 

TABLE OF FOREIGN COINS. 

Silver. 



Countries. 



entine Republic , 

tria-Hungary , 

Ivia , 

zil 

garia ._ 

tral American States. . , 
Costa Rica \ 
Guatemala 

Honduras |- 

Nicaragua 
Salvador J 

li... .., 

smbia 

la , 

lador 

pt 

land , 

man Empire 

at Britain 

^ti , 

ia 

an 

in Union 

f Belgium (francs) 

j France " 

\ Greece (drachmas).. 

I Italy (liras) 

1^ Switzerland (francs) 

tico 

herlands 

5ia 

u 

tugal , 

imania 

isia , 

ndinavian Union 

Denmark 

Norway 

Sweden 

'i'xz. 

in 

lis 

-key 

lezuela 



Peso 

Gulden (floriny. 

Boliviano 

2 Milreis 

2 Leii 

Peso 

\ Peso 

^Peso 

Dime 

|Dime 



Peso 
Peso 



Denomination 
of Coin. 



Sucre 

20 Piastres. 
2 Markkaa 
5 Marks . . . 

Florin 

Gourde 

Rupee 

■5 Sen 

5 Francs. . . 



50 Centimes. 
20 " 



5 Centavo , 
Florin 



Sol 

500 Reis 

5 Leii 

Rouble (prior to 1886). 
2 Crowns 



5 Dinars. . . 
5 Pesetas. . 

20 Piastres 
5 Bolivars. . 











^ 






►•o 


)-< .■ 




fk ^ 


> 4> 


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r3 c . 


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385.800 


900 


347.220 


190.517 


900 


171.465 


385.800 


900 


347.220 


393-516 


9i6§ 


360.723 


154-323 


835 


128.857 


385 . 800 


900 


347.220 


96.450 


900 


86.805 


192.900 


900 


173.610 


38.580 


835 


32.214 


19.290 


835 


16.107 


385.800 


900 


347.220 


385.800 


900 


347.220 


385 . 800 


900 


347.220 


432-096 


833^ 


360.080 


159-952 


868 


138.836 


428.666 


900 


385.800 


174-535 


925 


161.445 


385.800 


900 


347.220 


180.000 


916I 


165.000 


20.800 


900 


18.720 


385.800 


900 


347.220 


154-323 


835 


128.857 


77.160 


835 


64.428 


38.580 


83s 


32.214 


15-432 


835 


12.886 


20.889 


902.7 


18.859 


154-323 


945 


145.832 


385.800 


900 


347.220 


192 . 900 


916S 


176.825 


385-800 


900 


347.220 


319.920 


868.05 


277.706 


231.480 


800 


185.184 


385.800 


900 


347.220 


385.800 


900 


347.220 


371.216 


830 


308.104 


385.800 


900 


347.220 



o.tiH-:^ 



$0. 



935 
462 
935 
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-935 
•935 

.830 
•935 



238 TAXATION AND WORK, 

There are 480 grains in a troy ounce. There are 
371.2514 grains of silver in a silver dollar. Therefore, in 
order that a silver dollar may be worth as much after it 
is melted as it purports to be worth in the coined dollar, 
the price of bullion in New York must be a fraction 
over $1.29 per ounce. Fine silver bars are now worth 
88 to 90 cents per ounce. In other words, they are 
at a discount of thirty per cent., and the true value of 
the silver dollar at the present standard is substantially 
seventy cents ; it has recently been worth less. 

The prices of all our principal products are now on a 
gold basis. We get one hundred cents' worth of gold or 
its equivalent for each dollar's worth of cotton, corn, 
wheat, pork, butter, or other goods that we export ; our 
whole internal trafific is on the same basis and is measured 
at the same standard. 

The rates of wages and the incomes of all our people are 
now on a gold basis, liquidated in money worth one 
hundred cents on each dollar. 

The only effect of debasing our standard to silver worth 
seventy cents on a dollar will be to lower wages by 
destroying credit. 

The advocates of the free coinage of silver dollars of 
full legal tender have the audacity to say that an act for 
the free coinage of silver will bring the silver bullion and 
the silver coin of the world up to par in gold. They 
undertake to say that the United States can raise the 
value of silver from seventy cents, where it now is, to one 
hundred cents in gold, an advance of a fraction less than 
forty-three per cent. This claim only needs to be stated 
in order that its absurdity may be made conspicuous. 
The power of the United States to promote the cir- 
culation of silver certificates convertible into gold is 
already exhausted. Silver bullion is now uselessly piling 



TAXATION BY BAD MONEY. 239 

up in the Treasury at the cost of the tax-payers of this 
country. 

The people of this country are now paying a tax in 
gold of $4,000,000 per month, or $48,000,000 a year, for 
the purchase of silver bullion that nobody wants to use 
as money either in coin or in certificates. 

When the legal-tender notes of the United States first 
depreciated, the depreciation being shown by what was 
called the premium on gold, gold vanished from circula- 
tion and was hoarded or exported on the very day the 
premium reached even one per cent. When the so-called 
premium on gold reached a little higher rate, so that our 
subsidiary silver coin became worth more than the paper 
currency, the whole of our silver coin vanished and was 
seen no more for many years. As we moved on in 1878 
toward resumption on a gold basis, January i, 1879, ^^ 
silver coin first re-appeared and the gold next came back 
into the vaults of the Treasury and of the banks. No one 
could trace the silver and only a part of the gold in the 
statistics of the export and import of the precious metals. 

A difference of a fraction of one per cent, turns the 
tide of gold from one country to another. What would 
be the effect on silver when we offer to coin it at forty 
per cent, profit ? 

Our gold coin can be converted into sovereigns at the 
rate of %^.Z()66 to one sovereign. The sovereign is the 
coin which corresponds to the pound sterling, the pound 
sterling is the standard of international commerce. If 
the free coinage of silver dollars of full legal tender were 
granted, any foreign banker could now purchase silver 
enough to make $4.86 for less than three dollars and a 
half in gold. This conversion would be at work at once. 
These dollars would then be paid out in this country as a 
full legal tender on all contracts for cotton, wheat, pro- 



240 TAXATION AND WORK, 

visions, and other goods. Gold would be drawn out from 
the Treasury and from our banks to be shipped to Eng- 
land. The shock to credit would stop trade, except for 
daily necessities of life. The bankers who deal in ex- 
change would make immense profits on the import and 
conversion of silver into dollars, and the stupid people 
would suffer the cost. People are slow, but not so stupid 
as they seem. This nefarious act cannot be done. 

The advocates of the free coinage of silver dollars of 
full legal tender at the present time are trying to induce 
the people of this country to offer one hundred cents* 
worth of gold, or of our cotton, grain, meats, provisions, 
oil, and other products now worth one hundred cents in 
gold at present prices, for the whole volume of silver coin 
or bullion in the world which is now worth but seventy 
cents in gold. This would give forty per cent, profit to 
the dealers in silver bullion. 

The figures which I have given prove this, and no man 
capable of reasoning can deny it. It is beyond the power 
of the silver Senators and Representatives to disprove 
this statement. 

The Republican Senators and Representatives of the 
silver-mining States now demand that the West and the 
South shall take seventy cents' worth of silver instead of 
one hundred cents* worth of gold for their cotton and 
their grain in order to enable the silver miners to sell 
their little petty product of silver for more than it is 
worth. The Democratic Senators of the South and West 
with few exceptions have nibbled at this bait, but the 
trap has not yet been sprung. 

The trick is exposed, and the masses of the people who 
would pay the terrible cost of this nefarious measure 
have Avarned their representatives that this fraud must 
not be put upon them. 



TAXATION BY BAD MONEY, 24 1 

No coined money is true money and no coined stand- 
ard can be a true standard or unit of value of which the 
bullion is not worth as much after it is melted as it pur- 
ports to be worth in the coin. 

The silver dollar of the present standard is bad money ; 
it is a false standard because it does not meet these con- 
ditions. Its coinage must cease and the purchase of sil- 
ver bullion must be stopped. This verdict has been 
rendered, and either this or the next Congress will enforce 
the decision by suitable legislation. 

The Bland act and the McKinley act have been alike 

condemned, — neither has any intellectual standing nor 

any intelligent support. Both are marked alike by a 

perversion of the power of taxation to purposes of private 

gain in total disregard of the public welfare. 
16 



CHAPTER XXIX. 
How TO Maintain Silver Equal to Gold. 

I HAD intended to close this series with Chapter 
XXVni. ; but I venture to add number XXIX., for the 
purpose of submitting a suggestion made by Mr. Chauncey 
Smith, whose close study of these subjects gives great 
weight to his conclusions. Chapters XXX. and XXXI. , 
concluding this series, will summarize our present position 
on the tariff question. 

It is admitted by all the advocates of the bi-metallic 
theory, and even by all the advocates of the free coinage 
of silver of full legal tender who are not themselves per- 
sonally interested in silver mining, that the only element 
which is absolutely necessary to the unit of value or 
standard of lawful money by which all contracts are liqui- 
dated is stability or uniformity of valuation year by year, 
decade by decade, and, so far as it is within the power of 
human foresight, to assure it, generation by generation. 

It is urged, and indeed it is believed by many persons, 
that gold has become relatively scarce and has appreciated. 
It is therefore held to be insufficient in quantity to meet 
the conditions of a lawful standard or unit of value. It is 
held that silver must be coined, and must be kept at a 
parity with gold, in order that there may be a sufficient 
quantity of coined money both of gold and silver to meet 
the demands of the world for the use of coin. The main 
problem is how to maintain the parity of silver with gold 

242 



ffOW TO MAINTAIN SILVER EQUAL TO GOLD. 243 

and how to keep it in circulation without incurring the 
danger of demonetizing gold and throwing the whole 
work upon silver only. It may have remained for my 
sagacious friend to solve this question in a very simple 
manner, one which would be manifestly right and just and 
to which no one can take exception whose purpose is not 
to depreciate the standard or unit of value or to force the 
country upon a single silver standard. 

The purpose is to enable the people of this country to 
avail themselves of our production of silver as well as of 
gold, to convert that silver into coin, and to maintain that 
coin at par with gold. 

There may be one very simple, certain, and effective 
method of doing this, for which we have an example in 
the experience of our country. 

The surest way to keep the valuation or estimation of 
any given article above what it would otherwise be, is to 
add to its cost to the consumer by taxation. If the tax 
is one that cannot be evaded, if it is assessed at a mod- 
erate rate, so as not to promote fraud, and if it is levied 
both upon the import and the domestic production, it will 
eventually raise the cost and therefore the valuation of 
that specific article in the community that consumes it. 
We have an example in the present price of spirituous 
liquors, of which both the import and the domestic prod- 
uct are taxed. When the tax was first imposed at two 
dollars per gallon it was evaded ; when it was reduced it 
was collected, and presently it was advanced a little from 
the lowest rate at which it stood for some time. 

Tobacco is another example of an article of which both, 
the import and product are taxed, to the end that so far 
as the consumers are concerned the tax is added to the 
cost to the consumer and the price is based upon the cost 
of production, the profits to the producer, and the tax. 



244 TAXATION AND WORK, 

Liquors and tobacco now yield a revenue equal to the en- 
tire normal cost of the government, aside from the interest 
on the national debt, the bounties to the sugar planters, 
and the pensions, and that revenue is paid by consumers 
in the higher price and valuation due to taxation. 

The question put by Mr. Smith is : '' Why should not 
silver be taxed i7t the same zvay f " The standard by which 
silver bullion is bought and sold is its valuation in gold ; 
the effort of legislation, sustained by both parties at the 
present time, is to maintain the parity of our silver coin- 
age with our gold coinage. On the other hand, the price 
of silver bullion is thirty per cent, less than the nominal 
value of the silver in the dollar when it is converted 
by coinage into silver dollars. The price being quoted in 
cents, the gold dollar contains one hundred cents' worth 
of pure gold ; the silver dollar contains seventy cents' 
worth. These silver dollars have been maintained at a 
parity with gold coin down to the present time by limiting 
the quantity coined, and because they can be directly or 
indirectly converted into gold dollars through the United 
States Treasury. 

The free coinage of silver dollars of full legal tender 
without taxation would imperil the present standard or 
unit of value, and would, in the course of time, prevent 
the maintenance of the parity of our silver coin with our 
gold coin ; gold would then be demonetized and our cur- 
rency would be contracted to a silver standard, thus de- 
stroying credit, bringing about a cessation or paralysis of 
trade and lowering rates of wages. 

In the long distant future the country would, of course, 
adjust itself to the single silver standard ; wholesale prices 
in silver would rise rapidly, retail prices would follow 
slowly after stocks had become exhausted, but wages 
would remain depressed for a very long period and until 



HOW TO MAIN-TAIN- SILVER EQUAL TO GOLD. 245 

full confidence and enterprise had been restored so far as 
they might be on a single fluctuating silver standard. 

This danger may be wholly avoided if there is merit in 
the suggestion offered by Mr. Smith ; to wit, to tax both 
the import and product of silver in a sum that would repre- 
seftt the exact difference betweeii the value of silver bullion 
in its ratio to gold. 

This method, if it could be framed in practical legisla- 
tion, would be beneficial to all parties. Only that propor- 
tion of silver ore would be taken out of the ground to be 
smelted and converted into coin that would be required 
for use in that form at the cost of production with the 
tax added. Of course, other supplies of ore or of silver 
bullion would be required for use in the arts, but so far as 
the monetary use of silver in our country is concerned the 
supply would be limited to the demand that would ensue 
for bullion at cost subject to the tax. 

If it were proved by the ofYer of free coinage of taxed 
silver that there was no deficiency of gold and that silver 
coin under these conditions was not required, then the 
silver ore would remain as a reserve store in the ground 
to meet future needs and to be drawn upon only so fast 
as it might be required for use in the arts. If free coinage 
raised the price, then the tax would be correspondingly 
reduced. 

It may be objected that there is a large foreign demand- 
for silver at the present low cost of production and loW| 
price. That demand, however, may be very easily met 
by a drawback of ninety-nine per cent, on the tax or duty 
if any silver had been imported ; in this respect copying the 
provisions of the law upon tin-plates upon which a draw- 
back is allowed upon exports ; silver bullion mined within 
our own limits could also be exported in bond free of 
taxation, as whiskey is. 



246 TAXA TION AND WORK. 

In this way our mines would continue to be worked for 
the full supply of all the silver that the world requires, 
while the danger of imperilling the stability of our own 
currency would be avoided by keeping the domestic price 
of bullion always at a certain ratio to gold by varying the 
price according to the price of untaxed bullion. 

It may be objected that the price of silver varies, but in 
dealing with other questions the country has become 
habituated to granting discretion to the Secretary of the 
Treasury. Under the present law the only imperative 
rule is that he shall buy so many ounces of silver bullion 
each month without regard to the price ; this leaves to 
his discretion all negotiations for fixing the price at the 
time of each purchase. 

A tax might be imposed on silver subject to variation, 
month by month, according to the market price of silver 
bullion. A very simple computation could be made at 
the beginning of each month for an adjustment of the 
tax to the exact difference between the market price of 
the bullion and the unit of value which it is the intention 
to maintain unimpaired. 

This would be a perfectly suitable, effective, and just 
method of maintaining the parity of silver and gold in our 
currency ; it would prevent the waste of silver ore from 
our mines, while at the same time enabling the owners of 
the mines to supply all other nations free from taxation. 

In the matter of the adjustment of the rate of taxation 
we all have an example in the present tariff of duties on 
other imports than those of silver. The declared purpose 
of the present tariff and the declared purpose of the Re- 
publican party is to put exactly that measure of taxation 
upon foreign imports that will represent the difference in 
the labor cost of each product in other countries as com- 
pared to the labor cost of the same commodity in this 



now TO MAINTAIN SILVER EQUAL TO GOLD. 247 

country. That, indeed, is a very complex matter, but 
Congress has undertaken it. 

Where it would be impossible to vary a tax according 
to the cost of silver, the tax may be readily adjusted ac- 
cording to the price. No one knows what the labor cost 
of the production of silver is except those who work the 
mines and smelting works, and they keep their own 
councils. 

It varies, of course, from a low cost to a cost very much 
above its gold value. But the price of silver bullion can 
be determined every day, and it would be wholly within 
the power of the government to vary the tax every day if 
that were expedient. It would be sufficient, however, to 
vary it only once for a considerable period, for the reason 
that if the price of bullion should rise, then the tax would 
fall, and then silver that had been coined at a higher cost 
under the imposition of a higher tax would be worth more 
than its face value, and would disappear from circulation, 
as our silver dollars disappeared from circulation prior to 
1873, because they were worth more as bullion than as 
coin. 

In fact this provision, if carried out, would bring into 
effect a perfectly simple method of maintaining the parity 
of silver and gold in our coinage without enabling the 
owners of the silver mines to put their product upon the 
government for more than it is worth. It offers a method 
of coining money and regulating the value thereof con- 
sistently with the terms of the Constitution, to which no 
exception can be taken except by those who desire to 
deprave our monetary system for nefarious or purely 
selfish purposes. 

The very simplicity of this suggestion will carry convic- 
tion of its being a true method to all persons who do not 
want to run the risk of depreciating the unit of value 



248 TAXA TION AND WORK. 

either in order to sell silver for more than it is worth or in 
order to pay debts for less than the amount agreed. For 
example, in order that the silver bullion in the silver dollar 
of the present standard shall be equal in value to what it 
purports to be in the dollar, the market price of fine silver 
must be one dollar and twenty-nine cents per ounce. In 
other words, in order that the silver dollar may be worth 
as much after it is melted as it purports to be worth in the 
coin, the fine silver in it must sell at a fraction over one 
dollar and twenty-nine cents per ounce. 

We will assume that on a given day after the enactment 
of the law under which the Secretary of the Treasury is to 
determine what the rate of the tax will be for a given 
period, the value of the silver bullion free from tax is 
eighty-nine cents per ounce. The difference between that 
and a valuation which keeps it at a parity with gold, to 
wit, one dollar and twenty-nine cents, is forty cents per 
ounce. Divide eighty-nine into forty, and we have the 
true ratio of the tax, namely, forty-five per cent.; 89 cents 
+ 45 per cent. = $1.29 per ounce. 

We will assume that the coinage is free, and that any 
owner of a silver mine may bring bullion to be coined ; we 
do not ask him what it may have cost him ; he is offered 
free coinage into dollars with which he can pay his debts 
and his wages subject to the true rate of taxation. The 
bullion worth eighty-nine cents per ounce is subjected to 
a tax of forty-five per cent., which he pays ; that is to say^ 
forty-five per cent, of eighty-nine cents is forty cents ; this 
tax forms a part of the cost of silver dollars, as all taxes 
are customarily added to the price. The addition of the 
tax carries the price or valuation of the bullion up to one 
dollar and twenty-nine cents per ounce. That is exactly 
where it should be in order to maintain the parity of the 
silver dollar with the gold dollar. 



no IV TO MAINTAIN' SILVER EQUAL TO GOLD, 249 

No injustice is done to any one; the government gets a 
revenue, coinage is free, the unit of value is maintained, 
and if silver is to be exported, it is exported under a 
drawback, which will enable the owners to secure its full 
bullion value in all other markets without bringing disaster 
or disorder into the monetary system of his own country. 

This suggestion may perhaps be rightly acted upon 
while the subject of the free coinage of silver is pending^ 
even in the present Congress. 



CHAPTER XXX. 

The Issue Joined. 

Since the last chapter upon Taxation and Work was 
written, the nominating convention of the Democratic 
party has been held. The division upon the silver ques- 
tion is not a party division. The advocates of the free 
coinage of silver without the concurrent action of foreign 
nations are only a small faction in each party, and their 
day of temporary influence has gone from them. The 
purchase of silver bullion under present acts will doubt- 
less be stopped in the second session of the present Con- 
gress by the repeal or amendment of what is known as 
the Sherman bill. This purchase of bullion is not sus- 
tained by Senator Sherman himself or by many of his 
associates on the Republican side, nor will it be sustained 
by the Democrats. 

The main issue in the ensuing election is the tariff 
question. The logic of events has compelled the nomi- 
nating convention of each party to take a position upon 
this question which it is not probable that any large num- 
ber of the members of either party would have taken had 
a free choice been left to them. 

The enactment of the McKinley Tariff bill committed 
the Republican party to the policy of '' Protection with 
incidental revenue " against the judgment of its best- 
informed members. This act was framed under the 
direction of its sponsor, Mr. Wm. McKinley, Jr., consist- 

250 



THE ISSUE JOINED. 2$ I 

ently with his theory of the purpose of a tariff, which is 
to secure '' Protection with incidental revenue." When 
the RepubHcan party first subjected itself to the demands 
of the representatives of special branches of industry for 
the enactment of special schedules framed for the pur- 
pose of excluding foreign fabrics of the kinds made by 
themselves, by putting constantly increasing duties upon 
them without regard to revenue, the party placed itself 
under the necessity of continuing upon that line of policy 
to the end. It deprived itself of free choice, because to 
yield at any point would be to give up the fundamental 
idea upon which the McKinley act is based. The framers 
of the Republican platform had no choice in the matter, 
although this dogma of prohibition of imports for the 
benefit of certain classes is offensive to the largest and 
most intelligent portion of the members of the party. 
The declaration in the Republican platform is as follows : 
" We maintain that the prosperous condition of our country 
is largely due to the wise reve^tue legislation of the Repub- 
lican Congress. We believe that all articles that cannot be 
produced in the United States, except luxuries, should be 
admitted free of duty, and that on all imports coming into 
competition with the products of American labor there 
should be levied duties equal to the difference between wages 
abroad and at home.'' 

It will be observed that the question of revenue is 
wholly ignored in this declaration. Articles which in the 
judgment of Congress cannot be produced to advantage 
in this country, except luxuries, are to be admitted free 
of duty. Articles which in the judgment of Congress 
can be produced to advantage in this country are to be 
subjected to such high rates of duty as to stop the im- 
port. Articles like sugar, which could be produced in 
this country, but which Congress has chosen to make 



252 TAXATION AND WORK. 

free of duty, are to be made the subjects of a bounty at 
the cost of the tax-payers. 

The enforcement of this policy would lead to the neces- 
sity of direct taxation or to the imposition of an income 
tax, in order to secure the necessary revenue which may 
not be derived from the excise taxes on liquors and 
tobacco. 

I have shown that if the policy advocated in these 
terms were actually applied to the framing of a tariff 
measure, that measure would bring about a greater reduc- 
tion in the rates of duties that are imposed now under 
the McKinley act than has yet been proposed by any 
Democrat, because, in point of fact, there is not a duty 
imposed under the McKinley act on any article of any 
considerable importance which is not very much greater 
than the difference between wages at home and abroad, 
even if the cost of labor corresponded to that difference 
in the rate of wages, which it does not. The very form 
of this resolution proves conclusively that the McKinley 
version of the protective policy is intellectually dead. 
No person of ordinary intelligence who possesses even a 
superficial knowledge of the facts governing the produc- 
tion of the goods which are imported in the crude or 
partly manufactured condition, or of the useful fabrics 
which constitute the larger part of the finished manufac- 
tures, would have ventured to frame a resolution which 
can be so completely turned against the intention of those 
who framed it. Nine-tenths or more of all the articles 
consumed in this country are made at less cost for labor 
than in any other country, whatever the rates of wages 
may be. A very large portion of the imports from other 
countries come from countries which possess advantages 
in other respects than the cost of labor ; hence although 
their rates of wages may be lower and their labor cost 



THE ISSUE JOINED. 2$ 3 

may be more or may be less than it is with us, yet there 
is an advantage to them in selling their products to us, 
and there is an advantage to us in buying them. 

Only persons who are wholly ignorant of the facts which 
govern commerce could have been imposed upon by the 
representatives of wool, pig-iron, and silver, who make use 
of the Republican party in order to secure special legisla- 
tion at the cost of the masses for the benefit of the classes, 
in whose interest such resolutions and such acts as the 
McKinley tariff have been framed. 

It is noty however, the purpose of the framers of this 
resolution to make any reduction in the tariff correspond- 
ing to its true construction, nor would they admit that 
this plank in the platform is subject to the construction 
that I have given it. We must look to the more intel- 
ligent and thinking portion of the Republican party to 
find out what its leaders really mean. 

The party has committed itself through the law officers 
of the Republican administration to a specific declaration 
of its purposes. It has given a clear and definite meaning 
to the policy which it advocates under the name of ** The 
Principle of Protection." 

At the risk of repetition we must again refer to the 
briefs which were submitted to the Supreme Court of the 
United States in support of the McKinley tariff and of 
the bounty to the sugar-planters incorporated in the terms 
of that act. The official construction of the act and the 
declaration of the real purpose of the party are given in 
terms that admit of no evasion, by able advocates fully 
conscious of the necessity of presenting their case in the 
clearest and plainest terms. 

The following extracts from these briefs submitted by 
Hon. W. H. H. Miller, Attorney-General of the United 
States and by Hon. William H. Taft, Solicitor-General, 



254 TAXA TION AND WORK. 

should be substituted for the plank in the Republican 
platform in every discussion in the ensuing campaign. In 
fact, this entire brief in full should be reprinted for the 
information of the voters. The following extracts give 
the gist of the arguments : 

" The sugar-bounty clause was for the purpose of encouraging the pro- 
duction of raw sugar in this country. 

" The sugar bounty is to be paid from the Treasury of the United States, 
and, therefore, out of the general revenues of which the collections under 
this act will form a large part. . . ." 

Referring to the increase of duties on silks, woollens, and 
cottons, it is held in this brief that 

" The increase of the duties on those articles was not made for the pur- 
pose of increasing the revenue. The higher rates were imposed to give a 
better protection to the manufacture of such merchandise in this country. 
They were made with a view to decrease the importations, and with the 
prospect that the revenues would be thereby reduced. . . . 

" It may be conceded that the bounty must be paid out of the Treasury 
of the United States from funds raised by taxation, and therefore that, unless 
Congress has power to levy a tax for the purpose of paying the bounty, an 
appropriation for a bounty is beyond its power. . . ." 

After citing certain authorities, it is held as follows: 

" Congress has power, therefore, to levy duties for the purpose of pro- 
viding for the general welfare of the United States. Is the provision for the 
payment of bounty to sugar producers, above set forth, ' for the general wel- 
fare'? Appellants' counsel contend that it is not, because it is primarily for 
the aid of private individuals and only remotely for a public purpose, and 
therefore not for the general welfare." 

" It has been held in a number of cases, upon which appellants' counsel 
rely, both in this court and \\\ the courts of the various States, that taxation 
must be for a public purpose, and therefore that, where it is proposed by a 
municipal corporation to pay money or lend credit to a private individual or 
company as an inducement to the construction of works within the limits of 
the municipal corporation, the remote consequences of benefit to the people 
of that corporation are not sufficient to make the purpose of the donation a 
public one, and laws authorizing the same are void. The leading case upon 



THE ISSUE JOINED, 2^$ 

this subject is Loan Association versus Topeka (20 Wall., 655), where it was 
held that bonds issued by a city to pay a bonus to a manufacturing corporation 
to build its plant within that city were invalid and beyond the power of that 
city, even though expressly authorized by the legislature. Other cases to 
the same effect are numerous. " 

Reference being made to the other cases, the argument 
in this brief proceeds as follows : 

*' The foregoing do not include all the cases on the subject, but they are 
sufficient to show the principle which the appellants here invoke to invalidate 
the bounty clause under consideration. We respectfully submit that they 
have no application to this controversy. It is obvious that the establishment 
of a particular industry in one place by a bonus to specified private in- 
dividuals is a very different object for taxation than the encouragement by 
the National Government of a widespread industry in many quarters of the 
Union for national purposes, with a view to diversifying the industries of the 
country and making it independent of other countries for necessities. ..." 
" The principle was laid down in the case of Lowell vs. Boston, supra, 
that a purpose was not a public purpose because, by affecting the private 
interest of a great many individuals, it would ultimately affect the public 
weal. With respect to municipalities and States, that can have no inter- 
national relations, this is undoubtedly true, but the subject assumes a very 
different aspect when treated from the standpoint of the collective industries 
of a nation in competition with and in relation to the industries of other 
nations. . . . Such national action is required to offset the encouragement 
of the same industries in other countries, lest thereby we may be made alto- 
gether dependent for the supply of a necessity upon countries thus far 
removed." 

Citing Chief-Justice Marshall's decision in the case of 
McCuIlough vs. the State of Maryland, where the power 
of Congress to incorporate a bank was under discussion, 
the argument of the officers of the government proceeded 
as follows : 

" The principle thus established necessarily justifies bounties, for, in the 
beginning of the operation of a protective tariff, the amount of duty levied 
is a bounty to the domestic manufacturer and it is with a view to such a 
benefit for him that it is levied. The sugar duties have always had the 
effect of a bounty to domestic sugar producers. . . . The question of 



256 TAXATION AND WORK. 

the validity of bounties is therefore as old as that of a protective tariff and 
has been answered in the same way by constant legislative and executive 
action, in accordance with the views of that ablest of statesmen and jurists 
who penned the Report on Manufactures. . . . If a century's construc- 
tion of the Constitution by Congress is binding on the courts, then the 
question of the power to tax for a bounty to particular industries is no longer 
an open one. . . 

"A course of legislation and an acquiescence of the people as old as the 
nation itself has sanctioned both direct and indirect bounties for the encourage- 
ment of those industries which are closely allied with national growth and 
national independence, as a public purpose and as within the power of 
Congress. . . . 

' ' We have been discussing heretofore the validity of the bounty features 
of the sugar clause on the theory that provision of this sort was for the 
general welfare. There is another ground upon which it can be supported. 
All the authorities agree that the government may recognize a moral obliga- 
tion to any class of citizens by direct appropriation, though the claim is not 
based on strictly legal grounds. . . . 

" Here was a case where citizens, by reason of heavy sugar duties which 
had existed for many years had been induced to make large investments in 
the plant required for the production of sugars ; and now it was proposed 
by Congress to remove the duties because the revenue which they pro- 
duced was more than sufficient for the use of the government. The removal 
of duties would absolutely destroy fifty or sixty million dollars' worth of 
property invested in this industry and protected by the duties. To enable 
persons whose property would be thus injuriously affected to prepare for the 
change, the government was under a moral obligation to reimburse them for 
their loss or to permit them by a bounty to continue the business until such 
time as the business might be self-sustaining." 

In this declaration of the law officers of the Republican 
Administration all the rubbish is swept away about 
putting our taxes upon others, — every assertion that the 
tariff is not a tax, — and every suggestion that its purpose 
is not to create a bounty for favored classes out of the 
proceeds of taxation paid by the masses. The power of 
Congress is declared to be supreme, and the power of the 
Supreme Court to reverse its decision in the matter is 
denied. 

Such being the position in which the logic of the case 



THE ISSUE JOINED, 2^'J 

has placed the Repubhcan party, we may now consider the 
position of their opponents. The Committee on Reso- 
lutions of the Democratic party first framed such a defi- 
nition of a tariff policy as it was thought judicious for the 
party to put into its platform, but the convention itself 
chose to put aside all consideration of mere policy and 
plant itself upon the principle upon which the Democratic 
party now stands. Perhaps a majority of the convention 
would not have committed themselves so absolutely, 
except under the excitement and enthusiasm of the 
moment, and they may have " builded better than they 
knew." This declaration of a Democratic principle is 
stated in the following plain terms : 

" We declare it to be a fundamental principle of the 
Democratic party that the Federal government has no 
constitutional power to enforce and collect tariff duties 
except for the purpose of revenue only, and demand that 
the collection of such taxes shall be limited to the neces- 
sities of the government, and honestly and economically 
administered." 

The issue is joined. The position of the Republican 
party, through its law ofificers, has made it evident that the 
so-called " principle of Protection " is a policy for taxing 
the many for the benefit of the few. The Democratic 
party denounces this assertion of power, and plants itself 
upon the principle that all taxes that the people pay the 
government shall receive, and that no moneys shall be 
expended except for the support of the government, 
economically administered. 

The Republican party denies that the rule of law laid 

down before the Supreme Court by Justice Miller should 

control the National as well as the State legislatures. 

Justice Miller gave his ruling in the following terms : '' To 

lay with one hand the power of the government on the 
17 



258 TAXATION AND WORK. 

property of the citizen, and with the other to bestow it 
upon favored individuals to aid enterprises and build up 
private fortunes, is none the less robbery because it is done 
under the forms of law and is called taxation. This is not 
legislation. It is a decree under legislative forms." 

The real point at issue is the question whether or not 
the Congress of the United States possesses a limited and 
delegated power, or whether it is so supreme that even the 
highest court of the land must submit to its decrees with- 
out regard to the merits of any question that may be 
brought before it. The Republican party declares that 
the plain rule as laid down by Justice Miller in Loan Asso- 
ciation vs, Topeka has no binding force. The Democratic 
party declares that it is binding upon every legislature, 
including the Congress of the United States. 

The Republican party, through its law officers, holds 
that Congress may grant bounties at the expense of its 
tax-payers to favored branches of industry, and that when 
the owners of capital have invested their money in that 
industry, they thereby secure a vested interest in the pro- 
ceeds of taxation, and that the Congress of the United 
States is thereafter" under a moral obligation " to tax the 
people for the support of such private citizens or private 
corporations until the business that they have undertaken 
becomes self-sustaining. 

The Supreme Court did not rule upon this question in 
the McKinley cases. It was not brought directly before 
the court, and the court passed it by. The case is now 
removed from the court to the adjudication of the people 
of the United States. History repeats itself. The posi- 
tion of the Republican party now corresponds to that of 
the Whig party in the ante-war period, a party which was 
endowed with good intentions, but was without convic- 
tions. As the Whig party destroyed itself by attempting 



THE ISSUE JOINED. 259 

to compromise with slavery, so may its prototype destroy 
itself by its readiness to compromise the monetary safety 
of the country and the interests of the mass of the people 
for the sake of continuance in power. 

The Democratic party of to-day finds its prototype in 
the Republican party, as that party was when it was first 
organized, a party devoted to principles. The Demo- 
cratic party has been forced by the logic of events to 
ignore the partisans who have tried to control it ; it has 
become in a true sense the party of the people, the ex- 
ponent of equal rights, and it has planted itself upon a 
principle which is impregnable. 

Between the two have stood the Independents, whose 
prototypes may be found in the Free Soil party of the 
ante-war period, a party that never elected a candidate to 
any high office and which was represented in Congress by 
a few members only ; but they were men whose courage 
and convictions gave them a dominant power in inverse 
proportion to their number, such as the Independent 
members of the present Congress have exercised. 

The issue is joined. Taxation and Work are names for 
the same thing ; each voter will soon be called upon to 
decide for what principle and for what party he will work 
and vote. 

The manifest tendency of right-minded and reasonable 
men of both parties in the present Congress has been to 
take the question of the currency out from party politics. 
This power may soon be exerted so as to take the tariff 
question out from party politics, so that during the second 
session of the present Congress a reform of the tariff may 
be brought about in a way that will harm none, but which 
will do justice to all by establishing true protection to do- 
mestic industry through the exemption from unnecessary 
^axation of all the materials which are required in the pro- 



26o TAXATION AND WORK. 

cesses of our own domestic industry, coupled with duties 
for revenue on finished products, so adjusted as not to 
exceed the difference in wages at home and abroad. 

Unless this coalition and compromise are made in the 
present Congress at its second session, so as to prevent the 
tariff becoming the football of mere politicians, there will 
be great danger of radical and revolutionary changes in 
our policy which will provoke a reaction and endanger the 
steady progress of a true reform of our whole fiscal 
system. 



CHAPTER XXXI. 

Personal Observations— Conclusion. 

It may not be considered egotism if in this concluding 
number of the series of thirty-one essays upon '' Taxation 
and Work " I should state the reasons why I have put 
the data in this form, while I may at the same time give 
the motive of the whole series. In one respect and per- 
haps only one, the methods of the British administration 
and Parliament are better than our own. The questions 
which are brought before Parliament are of two kinds ; 
first, measures by which a given administration will stand 
or fall and upon which divisions will be surely made upon 
party lines. Second, measures which are not distinctly 
party measures, but which Her Majesty's opposition 
shares with Her Majesty's administration in perfecting. 
In many cases measures of the second class are subject 
to parliamentary investigation by special committees, of 
which the members are selected purely with regard to 
their assumed knowledge of the subject and with very 
little regard to party lines. Reports of such committees 
have become historic for the exhaustive thoroughness with 
which the work has been done. 

A beginning has been made by the present Senate of 
the United States in the conduct of an exhaustive exam- 
ination of this kind. Every one who has become con- 
versant with the methods that have been adopted by the 
members of the Finance Committee of the Senate in the 

a6z 



262 TAXATION AND WORK. 

investigation of prices and wages during the last half 
century and the influence of tariff legislation thereon, will 
wait for that Report with full assurance that through the 
combined action of the members of that committee of 
both political parties an exhaustive and impartial state- 
ment will be made. 

It has become my good or ill fortune to obtain such a 
measure of authority in the investigation of financial 
questions as to have been called upon very many times 
during the last twenty-five years to give statements of 
facts, figures, and conclusions to the leading men of both 
political parties in the House and Senate and in executive 
ofifice ; I have also been subject to a wide correspondence, 
of which the requirements are somewhat difficult to meet. 
I have seldom been called upon to change a statistical 
statement or to alter a conclusion, and I believe that I 
have been quoted as authority as often by the advocates 
-of high tariff Protection as I have been by the representa- 
tives of tariff reform or Free Trade. 

The methods of the representatives of cither party in 
this country, with a few conspicuous exceptions, are as 
bad as the English methods are good, keeping in view the 
search for the truth. Whatever statement, or judgment, 
or conclusion is submitted on the one side is usually met 
by a denial and an attempt at refutation on the other. 
Silly charges are bandied about by both sides. A lot of 
rubbish about the Cobden Club, the Home Market Club, 
British Gold, and Protective Greed is sure to appear when- 
ever the subject comes up in the greater number of the 
party papers, and as surely as this vituperative method 
appears, as surely arc the opinions or conclusions of that 
newspaper worthless. Men are held up to personal ob- 
loquy, charged with merely selfish interests, and abused 
roundly by all the party press on one day ; if they then 



PERSONAL OBSERVATIONS — CONCLUSION. 263 

have the fortune to die suddenly, on the next day before 
the discussion is ended the same papers that had charged 
them with being bribed with British gold, or with seeking 
to rob their neighbors by the perversion of the powers of 
taxation, will hold them up as excellent examples of 
reputable citizens or legislators who had undoubtedly 
been a little mistaken in the direction of their work but 
had never failed in conscientious devotion to the duty 
with which they had been charged. The praise may be 
often as much misplaced as the blame had been. 

Fortunately there are conspicuous exceptions to these 
foolish practices. Reference is often made to previous 
debates in the time of Clay, Webster, Calhoun, Benton, 
and other party leaders of old time. The writer has fol- 
lowed the tariff and currency debate of that period in the 
books and of the last few years in the Congressional Record. 
He must bear witness to a conclusion which will not be 
generally accepted, namely, that for sincerity of purpose, 
mastery of detail and logical conclusions from the pre- 
mises upon which the arguments have been based, the 
debates of the last five or six years on either side have 
been as far in advance of those of a former time as the 
statistical data and general information in regard to our 
industrial conditions now exceed what were available in 
any former period. 

It would be invidious to mention names, but it is a pity 
that some method should not be devised for establishing 
a judicial board of publication so that real discussions, the 
genuine arguments and the impartial statements that 
form the lesser part of the Congressional Record, might be 
separated from the set speeches prepared in the committee 
rooms which are apt to be addressed much more to the con- 
stituency or to the partisans of each side than with any ex- 
pectation of influence in the pending discussion in Congress. 



264 TAXATION AND WORK. 

The same bad methods have affected private organiza- 
tions on either side of the tariff question. Nearly twenty 
years ago the writer left the Free-Trade clubs and organi- 
zations, which were then active, simply for the reason 
that their methods were unjust and bad. They imputed 
the most selfish and corrupt motives to those who sup- 
ported the pohcy of Protection ; while, on the other 
hand, the advocates on the Protective side seemed to lose 
all sense of right and reason in their comments upon the 
advocates of Free Trade. 

Under the influence of this bad method of dealing with 
what is purely a business question, each side has come 
to distrust the other so as to prevent any co-operation 
in removing defects, both in the tariff itself and in its 
administration, which are admitted by all and might be 
remedied if the opposition party in our Congress could 
be guided by the same sound judgment that is exercised 
by Her Majesty's opposition in the British Parliament, 
whether Liberal or Tory. 

In the foregoing series the writer has endeavored to put 
the case of Protection versus Free Trade, and of Free 
Trade versus Protection upon its merits ; he has attempted 
to deal with it both on the ground of principle and of 
pohcy ; he has given the reasons why there is no distinct 
principle or " rule of action governing human beings " 
upon which a high tariff can be justified ; he has also 
given reasons why Free Trade although founded upon a 
principle, that is to say, upon a rule of action governing 
human beings when their conduct is not altered, changed, 
or directed by statute law, must yet, at present, be dealt 
with as a policy in practice. He has also given reasons 
why the rule of action which would govern legislation if 
there were no need of a revenue from customs or duties 
upon imports has been and must be modified by that fact. 



PERSONAL OBSERVATIONS—CONCLUSION, 26$ 

Therefore, the question of Free Trade as well as Pro- 
tection now becomes a matter of policy rather than one 
of principle. This leads to a similar conclusion which 
must govern the action of both parties ; to wit, in fram- 
ing measures for the collection of revenue from the duties 
upon imports such discrimination must be exercised as 
will most certainly promote domestic industry and protect 
home labor. 

That conception of a true policy being established the 
only question remaining open is simply this: Will Pro- 
tection be most fully assured by exempting materials of 
foreign origin from taxation and promoting the inter- 
dependence of states and nations, or by taxing such 
material and stopping commerce ? Shall we more surely 
promote domestic industry and protect home labor by 
isolating this nation from others and attempting to estab- 
lish what is called " national industrial independence " 
in place of international interdependence? One does 
not like to use such long words ; in the vernacular, Will 
a State be bettered by attempting to support itself 
wholly, or will it do better by exchanging products with 
other countries for mutual benefit? 

In dealing with the case from the latter point of view, 
so far as I have presented the facts I shall probably have 
furnished arguments for both parties in future controver- 
sies as I have in the past. 

When I have borne witness to the fact that this country 
is more prosperous than any other, and has prospered 
more in the last twenty-five years than ever before, I shall 
have furnished even the advocates of the McKinley act 
with an argument on which they will attempt to sustain 
that measure, which is so obnoxious to myself. 

When I have stated that the obnoxious provisions of 
the McKinley act for raising a revenue of about fourteen 



266 TAXATION AND WORK. 

million dollars a year by taxation on crude materials of 
foreign origin which are necessary to our domestic indus- 
try have cost this country fifty-fold the amount of revenue 
that is received by the government, or seven hundred 
millions, in a single year, I shall have furnished an argu- 
ment with which the advocate of tariff reduction will 
prove his case on irrefutable evidence. 

When I have declared and attempted to prove that the 
tariff has been one of the minor forces in its effect upon 
the direction of labor or investment of capital in this 
country, I shall have disappointed the advocate of Free 
Trade, and may have taken from him what seems to be a 
potent argument. 

On the other hand, when I have attempted to prove 
that the obstruction of the means of payment with which 
foreign nations buy the excess of our farm products is 
injurious in the extreme, I shall have furnished the advo- 
cate of Tariff Reform with most potent reasons for mak- 
ing a change. 

When I have said, however, that the long existence of 
a high tariff has given a different direction to the invest- 
ment of a large amount of capital and has provided em- 
ployment for a very large body of working-people on 
different lines from those on which their labor would have 
been exerted under other conditions, I shall have given 
complete justification for maintaining even high revenue 
duties, for a limited period, upon the import of the finer 
products of our mills and of our workshops which cannot 
be gainsaid. When I have attacked the general policy of 
the McKinlcy act, I shall be charged with being a member 
of the Cobden Club and subject to the subtile influence 
of British gold, and when I have stood up for the policy 
of continuing the revenue duties upon finished fabrics for 
a reasonable period, I shall be charged by the intolerant 



PERSONAL OBSERVATIONS — CONCLUSION. 26/ 

free trader with making an exception in favor of my im- 
mediate associates at the cost of the wool growers and 
the makers of pig-iron. 

When I have stated that proofs can be submitted that, 
with the exception of certain industries that have been 
protected not only by a tariff, but also by patents and the 
control of great bodies of ore or coal, the branches of 
manufacturing which have been subjected to the stimulus 
of a high tariff have not been as a whole profitable, — I 
shall have taken away from the free-trade orator one of 
the principal grounds of his attack. 

It is necessary that all these varied misconceptions 
should be removed, and that the pending discussion 
should not be obscured by errors and mistakes on either 
side. 

I long since bore witness to the very grave danger that 
would ensue from bad methods of changing even a bad 
tariff system. I have witnessed the results of such 
methods and the present recurrence of such danger. The 
so-called free-trade tariff of 1846 is an instance of a bad 
method of reforming a bad tariff. The tariff of 1842, 
which was by intention a highly protective tariff, discrim- 
inated in both directions by high duties on finished 
fabrics, and low duties or the free admission of crude 
materials. It led to a large investment of capital in many 
branches of work by men who were not capable of under- 
taking them under ordinary conditions, but who might 
perhaps have learned how to do the work except for 
changes made in the very reverse direction in the tariff of 
1846. This tariff has been called a free-trade tariff, it was 
really nothing of the kind. It was a measure, as I have 
been informed, that was framed under the direction of 
the late Robert J. Walker by a committee of custom- 
house officers, and it was carried under party control 



268 TAXA TION AND WORK. 

without amendment. In many instances it raised the 
duties on crude materials above what they had been while 
it reduced them on the finished fabrics. It thus discrim- 
inated against the very branches of industry which had 
been to some extent unwholesomely promoted under the 
previous act of 1842. Unnecessary harm was done by 
raising the duties on crude materials, and this disaster was 
attributed in general terms to what became known as " A 
Free-Trade Measure." This act was subsequently 
amended by the abatement of the duties on crude 
materials, to the end that under the tariff of 1857, in 
which very low rates compared with those now in force 
were put upon finished fabrics while crude materials were 
either free or subject to low duties, the progress in the 
manufacturing arts which had been subject to great varia- 
tions and fluctuations previously, was more steady, uni- 
form, and freer from great fluctuations than under any 
system of duties which has ever come under the observa- 
tion of the writer. 

This danger of lack of discrimination in amending a bad 
measure has again happened in recent years. It has been 
proposed by conspicuous persons, even among the advo- 
cates of protection, to reduce the duties on goods and in 
the same measure to raise them higher on the materials 
which are necessary in these protected manufactures. 

Again, some of the measures which are even now pend- 
ing in the present Congress, represent neither a principle 
nor a sound business policy ; they are sectional, or else 
they have been promoted by mere opposition to trusts. 
If suitable discrimination were applied in the preparation 
of a broad and general measure of reform, the duties, for 
instance, upon cotton ties would not be taken off until 
the manufacturer of cotton ties had been placed in a posi- 
tion to compete on even terms with the foreign iron- 



PERSONAL OBSERVATIONS — CONCLUSION. 269 

worker by the removal of the duties upon the material 
from which cotton ties are made. The removal of the 
duty upon binding twine may not be justified on any 
sound principles of discrimination in framing a revenue 
measure, until the manufacturer of binding-twine and 
cordage has been given a position equal in advantage to 
his foreign competitor by taking off the tax on the mate- 
rials that enter into the construction not only of his 
goods but also of his machinery. The proposition to 
abate duties on some classes of crude materials while 
maintaining them on others, because their abatement 
might have a sectional effect adverse to party success is 
without justification. On the other hand, all these meas- 
ures are merely tentative, and may perhaps be defended 
in order to show the final direction on which a reform 
of the tariff would be carried into effect in one com- 
prehensive bill if it had not become a mere party 
question. 

Again, while the rule of high wages derived from low 
cost of production may be proved to govern all the arts 
which have been of necessity conducted within the limits 
of our own country in which our interstate or domestic 
commerce is absolutely free, this rule has been subject to 
a variation in our relations with foreign countries. By 
keeping the demand of this country, which possesses the 
greatest power of purchase, from being freely made upon 
the textile factories, iron foundries, workshops, and other | 
establishments of England and other countries, it may 
doubtless be proved that the rates of wages in these par- 
ticular arts have been kept lower in Europe than they 
would otherwise have been had our demand been free — 
while the rates of wages in these specific arts in this coun- 
try may have been maintained as high as the high rates 
of wages that prevail in other pursuits ; such rates being 



2 JO TAXATION- AND WORK, 

higher than those paid under existing conditions in foreign 
countries. It follows of necessity that if these specific 
finished products were suddenly admitted to this country 
free of duty, there would be a destruction of capital and 
a taking away of established methods of work which 
would be wholly destructive and unjustifiable. Discrim- 
ination may rightly be applied to the maintenance of 
duties for revenue purposes on these finer goods and 
fabrics which are of voluntary and not of necessary use. 
Such duties may be maintained without harm to the con- 
sumers until the establishments have had time to become 
adjusted to the new conditions of free commerce in the 
component materials that enter into their products. 

What the exact effect of the adoption of this policy 
of common-sense would be upon existing forms of indus- 
try can hardly be demonstrated in advance. In the 
judgment of the writer, the stimulus to the textile arts in 
the useful or necessary directions, and to the higher 
branches of metal working would be very great ; it would 
probably lead to a reduction in the import of many kinds 
of textile manufactures, and to an increase of our ex- 
ports of textiles and yet more of metal work. It may be 
observed that our export of what are called manufactures 
is even now increasing in considerable measure. In the 
line of metallurgy it consists of goods of the highest 
grades to which most skilful labor is applied at the highest 
rates of wages ; that branch of export traffic would be 
very greatly stimulated if the consumers of metal in this 
country could secure their supply of crude materials on 
the same terms with their competitors in other countries, 
whatever the actual prices might be in any given year. 
The same reasoning would be in a measure true in its 
application to staple textile fabrics ; the finer kinds of 
textiles, however, depend so much upon style, fashion, 



PERSONAL OBSERVATIONS — CONCLUSION. 2/ 1 

and fancy for their sale, that we cannot predicate the 
future conditions upon any single rule. 

It must, however, be here remarked that Great Britain 
is our principal customer. She has flooded us for many 
years with British gold in ordec to promote her own in- 
terests. Through the long-continued efforts of Richard 
Cobden, John Bright (antecedent to the conversion of Sir 
Robert Peel and W. E. Gladstone) for the remission of 
duties, the British taxes upon the import of our grain, 
meat, dairy products, and cotton were removed. The 
effect of this work of Cobden, and of his successors who 
now constitute the Cobden Club, has been such that 
within the last few years we have exported to Great 
Britain two hundred and fifty million dollars' ($250,- 
000,000) worth of our domestic products in excess 
of our imports from Great Britain. The figures of 
1 89 1, disregarding fractions, show exports from this 
country to Great Britain $445,000,000 in value; imports 
$195,000,000. The difference, $250,000,000, consists of 
British gold which has been placed at the credit mainly of 
our farmers who have found in Great Britain the most 
profitable place for the sale of their excess of grain, 
dairy products, meat, and cotton. The drafts for our 
purchases in other countries of sugar and of tea and 
coffee and other food materials, as well as of hides, wool, 
dye-woods, and other articles that enter into our manu- 
factures, have been drawn against this great fund of 
British gold for the support of our manufacturing and 
mechanical industries. 

I have thus given the motive of this series of essays, 
with the hope that the time may come — perhaps in the 
second session of the present Congress — when legislators 
will adopt what may be called the " method of agree- 
ment " ; or of cancellation by agreement of all points in 



2/2 TAXATION AND WORK, 

this problem that can thus be eHminated. It is related 
that two old-time clergymen of different denominations 
had been disputing a longtime upon many points of doc- 
trine. One day it occurred to them to undertake the 
" method of agreement," so as to bring their points of 
difference into such clear aspect that they could be reason- 
ably adjusted. In pursuance of this method they finally 
eliminated so many of the points of contention that all 
there was left for dispute was a different construction 
given to one Hebrew word in the Hebrew version of the 
Bible ; upon that one word they then agreed to differ 
without further contention. 

If this tariff question could be taken up by a jury of 
twelve men, selected on the ground of their being com- 
petent to deal with the whole subject, presided over by a 
true jurist, an act for the collection of an ample revenue 
for the support of this government, to be wisely and not 
penuriously expended, could be framed upon conditions 
that would assure to the people that all taxes that were 
paid by them would be received into the Treasury of the 
United States. This work could be done by adjusting 
the points on which all parties are now agreed, with as lit- 
tle difficulty as that which was met by the clergymen in 
doing away with the points of contention by which they 
had been so long parted. 

When it shall become useless for any specific body of 
men, for any district, for any State, or for any section 
to attempt to promote public legislation for the private 
support of any specific branch of work except tJirough ex- 
emption from taxation, — the prime cause of corruption in 
the civil and political service of this country will have 
been removed. Then, and only then, will a government 
of the people, by the people, for the people, be absolutely 
assured. 



PERSONAL OBSERVATIONS— CONCLUSION. 273 

It may perhaps be held to be somewhat presumptuous 
for any one person to attempt to deal with this great 
public question in the way in which it has been treated in 
this series of essays by calling " A plague on both your 
houses," — upon the doctrinaire free-traders and the in- 
tolerant advocates of McKinleyism alike. 

That argument, however, does not concern the writer. 
He has been guided by the rule of demand and sup- 
ply in providing such articles, essays, and treatises upon 
economic subjects as might be called for in a way that 
would warrant the work he has done in their preparation. 
Years ago the writer found out that the community 
would not be reformed by agitators, and that the only 
way for one who did not occupy a conspicuous public 
position to bring about righteous changes would consist 
in a close and constant observation and study of events, 
and in biding the time when the very circumstances of 
the hour would force public attention to be given to 
these great problems. 

For many years subsequent to the restoration of specie 
payments on the ist of January, 1879, i^ became apparent 
that the tariff question, in which the writer had previously 
taken quite an active part, had become an issue of lesser 
importance as compared to the maintenance of the public 
credit and of a sound currency. So long as one party 
could be depended upon more than another on that issue, 
it seemed useless to continue a discussion on the tariff 
question from which no practical results could be attained, 
because both vote and action must yield to the more 
important problem of the currency. 

It happened, unfortunately, that tlie party that had 
been dominant for many years and upon whom rested the 
responsibility of the maintenance of a sound currency, 
had also committed itself to such tariff measures as the 



274 TAXATION AND WORK. 

acts of 1867 and subsequent tariff acts down to 1883 in- 
clusive. It therefore became necessary that the policy of 
increasing duties in the vain effort to give protection by 
excessive taxation must run its course. It was long since 
manifest that it would culminate in some measure corre- 
sponding to the McKinley act, by which the fallacy and 
futility of the attempt to protect by privation of imports 
would be finally exposed. 

That time has come. Members of both political parties 
have now united in maintaining the credit of the nation, 
and will remain united and hold out to the end in suc- 
cessfully sustaining a safe standard of value. 

The policy of promoting American industry by the re- 
duction of taxation and by the exemption of crude 
materials from heavy duties, has now taken firm hold 
upon the mass of the people. Under such conditions it 
may be held to be the duty of every man upon whom a 
demand may be made, to submit what he believes to be 
the facts and to give the conclusions on which right 
measures of reform may be framed. Under such a con- 
dition of parties as that which now exists one should 
adhere strictly to the facts in the case ; by so doing he 
will inevitably take away the foundations of many of the 
delusions that have existed on either side of this discus- 
sion. The intolerants on either side may alike reject his 
conclusions, but it may happen that they will still serve a 
useful purpose. 

The interest of the whole people of this country is now 
excited upon questions of finance and taxation. The 
Farmers' Alliances, the Trades' Unions of the workmen, 
the Trade Associations of the employers, the advocates 
of Woman Suffrage, and the Labor organizations, are 
alike trying to deal with the problems that have been 
treated in these essays. That is a more hopeful condition 



PERSONAL OBSERVATIONS— CONCLUSION. 2/5 

than the inertia which has given an opportunity to the 
advocate of special legislation to carry out his measures 
without remark. 

In every emergency the great mass of people may be 
relied upon to support that policy which is right. Slow, 
but sure in action, the people detect the specious charla- 
tan who covers his selfish purposes under the show of 
working for the public good. They insist upon the truth, 
the whole truth, and nothing but the truth. That is what 
the writer has endeavored to present in this work with- 
out fear or favor, in response to an urgent demand made 
upon him from many quarters. 

It is interesting, for one who is convinced that the 
logic of events will govern the actions of men, to observe 
that even during the short period that some of these 
essays have been in process of publication in the daily 
press, the negotiation of additional treaties of reci- 
procity in trade, the passage of a bill to admit foreign- 
built steamships to American registry, and the increase 
in the revenues of the government from liquors and 
tobacco fully sustain all that has been said about the 
tendency of events, as well as all that has been submitted 
in regard to the ability of the country to remove every 
obnoxious tax and yet give full assurance of ample 
revenues for the future conduct of the government, 
coupled with sure protection, by exempting the materials 
required in our domestic processes from taxation, and by 
so doing enabling our foreign customers to pay with their 
own products for the products of our farms and factories. 

The Democratic party has become the party of Tariff 
Reform and reduction. The Republican party, having 
found out that McKinleyism is a blunder, seeks by in- 
direction to accomplish the same purpose through reci- 
procity and the free list. Ere long the logic of the case 



276 Taxation and woric. 

will govern, so that each party may try to outstrip the 
other in giving true protection to the manufacturer, the 
mechanic, and the farmer alike by the complete exemp- 
tion of all material from any taxation. 

In closing, I may again call attention to certain facts 
which are not yet patent to all. The area of the 
continent of Europe, omitting the uninhabitable por- 
tions of the extreme north, is about 3,000,000 square 
miles. The area of the United States, omitting Alaska, 
is about the same. Upon each continent there is every 
variety of climate except extreme heat, every variety of 
soil, and every variety of product except the tropical. In 
the United States the differences of race, creed, color, and 
condition are greater than in Europe. The methods of 
local taxation are as various or more so. On the one 
continent all forces tend to peace, order, and industry. 
There is abundance and great material welfare. On the 
other continent all forces tend to war, scarcity, pesti- 
lence, and even famine, to disorder, and to the enforced 
idleness of the barracks and the camp. What is the one 
difference in the conditions of the people of the two con- 
tinents? On the one side the people of each and every 
State serve each other under a system of absolute Free 
Trade such as was never before assured to an equal num- 
ber of people nor ever before extended over half a con- 
tinent. On the other, the barriers to mutual service are 
sustained by the armies which, except for these barriers, 
might be disarmed. 

The time may not be far distant when the intelligence 
of the people of this country will be equal to the oppor- 
tunity that is offered them to establish the one factor in 
our liberty of which we have been so long deprived, — the 
liberty of commerce. 



INDEX. 



Account, current, of government ex- 
penditures for fiscal year iSgo-'gi, 7 ; 
of United States ^vith tax-payers re- 
quires immense amount of clerical 
work, 41 ; proper form in which to 
state income of United States, i 

Accounts, enormous volume of, neces- 
sary in service of nation. 41. 

Activity promised ; depression result 
of McKinley tariff, 58 

Ad-valorem duty on woollen and 
worsted fabrics, 77 

" Agreement, method of," would settle 
tariff question, 271 

Agricultural, implements, we excel in 
manufacture of, 96 ; machinery, in- 
fluence in production of wheat, 163 

Agriculture, German, in a bad way, 
1 74 ; insignificant import of products 
of, 93 ; number employed in, 53 ; 
our supremacy in products of, 148 ; 
per cent, of people occupied in, 150 ; 
protection to, 150; United States 
excels in products of, 55 

Aldrich, Senator Nelson \V., defines 
principle of Protection, 82 

Alfalfa, clover, renovators, 149 

Alliance of both parties begun in recent 
action upon free coinage, 71 

Alternative method of tariff reform, 23 

American labor should be protected in 
choice of subjects for taxation, 45 

"American System " of Protection 7iot 
American, 48 

American workmen, taxation should 
protect, 61 

Anarchist, nihilist, and communist are 
complements of policy of blood and 
iron, 189 



Anarchy, danger in Europe caused by 
lack of food, 191 

Appleton, Nathan, took part in Free 
Trade meeting, 47 

Armies and navies must be supplied 
with food, 178 

Armies, waste of, 180 

Arms-bearing age, men of, in France, 
Belgium, Germany, and Holland, 
185 ; number of men of, 43 ; ratio 
of United States soldiers compared 
to European, 187 

Army and navy interest-bearing debt. 
Great Britain's, compared to United 
States, 188 

Army, carefully fed so as to secure the 
maximum of energy, 190 ; cost of, 
II ; German, must iDe subsisted, 11 ; 
importance of feeding, 178 ; tax 
upon industry of Continent of 
Europe, 186 ; United States, com- 
pared to armies of European stales, 
42, 43 ; United States, serves only 
as a border police, 43 

Articles, in crude condition (Class B), 
duties on, 13 ; wholly or partly 
manufactured (Class C), duties on, 13 

Artificial, conditions induced by high 
tariff, 59 ; result of Protection less 
favorable than natural course, 119 

Art, no important, established here as 
result of high tariff, 51 

Arts and manufactures established be- 
fore Hamilton's tariff, 51 

Asia, Africa, and other tropical coun- 
tries, slight use of machinery in, 173 

Asia, Africa, South America, and Aus- 
tralia, why we cannot supply ma- 
chinery to, 137 

Atkinson, Edward, his Report on Bi- 
metallism, 214 



277 



278 



INDEX, 



Atlanta Exposition, 1881, cotton manu- 
facture at, 165 

Australia and New Zealand, rate of 
wages in, xvi. 

Axes, price in i860 and 1880, 168 



B 



Banking, facilities, little increase in, 
216 ; restrictive legislation upon, 
should be removed, 217 

Banks, benefit of, 217 

Barley, Canadian, 197 

Bastiat, on workman's share of prod- 
uct, 162 

Belgium, duties for revenue only, 181; 
exports from, 1S2 

Berlin decrees of Napoleon, effect of, 
108 

Bessemer steel, patent, 147 ; profits 
in manufacture of, not due to Pro- 
tection, 99 

Best-fed nation in world is the United 
States, 175 

Bigelow, Erastus B, author of Wool 
and Woollen Tariff, 76 ; defines his 
position on tariff, 78 ; devotee of 
protective system, 72 ; framer of 
present tariff on wool and woollens, 
xiii ; justification of protective du- 
ties, 77 ; policy, failure of, in regard 
to wool, 78 

Bi-metallism, Atkinson's Report on, ii^^ 

Binding twine, duties upon, 269 

Blacksmithing, no foreign competition 
in, 97 

Blaine, James G., on tariff question, 84 

Bland act condemned, 241 

Blue Book, government, 8 

Bonds purcliased before maturity by 
revenue derived from taxing crude 
materials, 143 

Boston, price of adequate nutrition in, 
190 

Bounties and subsidies, unwise, vi ; 
upheld by legislators who decry 
commerce, 106 

Bounties, direct and indirect, sanc- 
tioned by the people, 1 16 ; fallacious 
expectations of, fostered ])y McKin- 
leyites, 129; justified, 255; justified 
by .Second Act of First Congress, 
115 ; premiums, etc., Hamilton on. 



87 ; to sugar-planters justified by 
Supreme Court, 114 ; to sugar- 
planters might better be used to 
increase salaries of public officials, 
40 ; to sugar planters, taxation for, 
8 ; vested right in, 117 

Breadstuffs, labor cost in production 
of, xix 

Breckinridge, C. R., and Wm. C, 
work on Mills Tariff Bill, 69 

Brick- and tile-making, 97 

British Association for the Advance- 
ment of Science in 1887 discusses 
bi-metallism, 100 

"British Free Trade" in United 
States, 123 

British, gold. American farmers, 271; 
steamers, why we cannot compete 
with, 136 ; tariff reform. Peel's 
first measure, 33 

Building trades, extent of ; necessity 
of exemption of materials from 
taxation, 151 

Burden, of tax put upon other coun- 
tries a misconception, 193 ; our 
relative, compared to European, 42 

Bureau of Labor, Seventh Report, 204 

Business men, salaries much greater 
than government officials, 40 

"Buy in cheapest market, sell in 
the dearest," 125 



Cabinet officers, salary of, 40 
Cairnes', J. E., theory of wages, 161 
California, wheat farm, figures almost 
incredible, 164 ; wheat production 
in, 164 
Canada, and United States during the 
Civil War, 105 ; certainty of com- 
mercial union with, 171 ; commerce 
with, 199 ; effect of duties on farm 
])roducts of, 129 ; immigration to 
United States, 195 ; reciprocity 
with, T95 ; relation with United 
States during war, 105 ; salesof prod- 
ucts of agriculture to, 56 ; United 
States, commerce between, 193 
Canadian, forest, product needed, 97 ; 
wages dejiressed, hence Canadian 
immigration to United States, 198 ; 
wheat, effect of our duties upon, 196 



INDEX. 



V9 



Canadians, competition of, with our 
workmen, 130; French, workers in 
our textile factories, 130 

Canal. Erie, value of products moved 
over, 222 

Canned provisions, tax on tin-plate, 
forbids exports, 133, 134 

Capital, and labor, apparent antago- 
nism, 160 ; becomes more auto- 
matic, brings about increasing pro- 
duct, 161 ; competition with capital, 
162 ; injudicious to destroy it by 
immediate Free Trade, Sy ; less 
required, as machinery becomes 
more effective, i6r 

Caprivi's, Chancellor, argument for 
reciprocity treaties, 105 ; resigna- 
tion, 174 ; speech, 192 ; speech on 
importance of feeding army, 178 ; 
verdict upon German McKinleyism, 

174 

Census, Eleventh, cost of, 10 ; of 
1880, statistics of wages and prices 
in Vol. XX., 166 ; of 1880, 94 ; of 
1890, 13 ; of 1890 should contain 
statistics of wages and prices from 
1880 to 1890, 166 

Central Pacific R. R. Sinking Fund, 

Cheap Cotton by Free Labor, 145 
Cheese and butter-making, 97 
Chief Justice, salary of, 40 
Circuit Court judges, salary of, 40 
Citizens' rights, decision of Supreme 

Court, 121 
Civil Service, no true order of merit 
in, 41 ; people's will that it be 
maintained, 24 ; reform needed 
in salaries of government officials, 

41 

Clay, Henry, debates in Senate with 
Webster on tariff, 48 ; defends 
"The American System," 48; 
Webster, etc., debates in time of, 
263 

Cleveland, tariff message of, vii 

Clothing, numbers employed in manu- 
facture of, 153 

Coal, and coke must be put in free 
list, xiv ; and iron control commerce 
of world, 138; cost ri-ing in Eng- 
land, 138 ; ores, crude iron, evil 
effect of tax on, 29 



Cobden Club, and British gold, 266 ; 
and Free Trade, 271 

Cobden's efforts for repeal of duties, 
271 

Coinage, a government monopoly, 
216 ; defined, 206 

Coin, must be worth as much after it 
is melted, 209 ; value derived from 
weight, 206 ; value of, depends on 
weight, 233 

Coins, foreign, gold, E. O. Leech's 
table of values, 236 ; foreign, gold, 
Norman's table of values, 234 ; 
foreign, silver, E. O. Leech's table 
of values, 237 ; foreign, silver, Nor- 
man's table of values, 235 

Cold climate, stimulus to textile arts, 

Collectivism, views in regard to State 
possession of property, i 

Columbus, 108 

Commerce, barriers to, will be re- 
moved, 276 ; centre of, may be 
brought here by Free Trade, 219 ; 
consists of exchanges conferring 
mutual benefit, 80 ; domestic, of 
United States compared to interna- 
tional commerce of all nations, in; 
foreign, obstructed by prohibitive 
duties, 230 ; Great Britain's, 183 ; in 
our steamships forbidden to United 
States by reason of its protective 
policy, 37 ; international, a state of 
passive war — stupendous blunder, 
109 ; of world, control given to 
Great Britain by stability of mone- 
tary system, 183 ; of world, we hold 
key to, 183 ; privation of, through 
tax on crude materials, 143 ; re- 
garded as passive international war 
by cranks, 105 

Commercial flag of Great Britain 
dominates every sea by reason of 
Free Trade, 37 ; wars caused by 
misconception of balance of trade, 
106 

Common-sense, effect of policy of, 270 

Communism, views in regard to State 
possession of property, I 

Compensation of United States officials 
beggarly, 39 ; to public officials, 
public no conception of meanness 
of, 40 



28o 



INDEX. 



Competition, among nations narrowed 
down, i8i ; danger of foreign, ex- 
aggerated, gi ; foreign, none in 
trade and transportation, or profes- 
sional and personal service, 55 ; 
foreign, with our finished manufac- 
tures, cannot determine rate of , 55 ; 
with Ohio in import of product of 
like kind necessarily very small, 56 ; 
worst kind, induced by bounties, 
114 

Congress, has no power to legislate 
what occupations shall or shall not 
be pursued, 119 ; has power to levy 
duties for the general welfare," 
254 ; has power to levy duties, 114 ; 
in second session could abate duties 
on all crude and partly manufac- 
tured articles, 71 ; may legislate 
"for the general welfare," 114 ; of 
the United States, power possessed 
by, 258 ; of United States more 
supreme than Parliament, 117 ; of 
1893, conditions it will meet, 124 ; 
Webster never dreamed of its domi- 
nation by Silver, Pig-iron, and 
Wool, 120 

Congressional Record^ admirable de- 
bates in, 263 

Contracts in gold dollars, meaning of, 
207 

Copper, United States deprived of 
free use of her own, 67 

Corn laws, repeal of, by Peel, 36, 37 

Cost, examples of reduction in, with 
higher rates of wages, 168 ; of 
national taxation represented in 
percentage of work, 8 ; of our 
labor lowest, rates of wages highest, 

54 
Cotton, and cotton fibre, Edward At- 
kinson on, 145 ; and grain, we pro- 
duce more than we can consume, 141 ; 
contrast between hand and machine 
labor in, 165, 166 ; dress-suit, made 
wholly in one day from field-cotton, 
165 ; factories (ifty years ago, 167 ; 
factory of to-day ; product greater, 
labor less arduous, wages liiglier 
than fifty years ago, 167, 168 ; -gin, 
invention of, led to spinning and 
weaving, 51 ; industry later than 
Hamilton's tariff, 51 ; lowest prices 



ever known between 1 842-1 846 
under high tariff, 48 ; low prices 
under the McKinley tariff, 48 ; 
manufacture, data of, computed by 
Edward Atkinson, 94 ; manufacture 
developed by invention of cotton- 
gin, 147 ; manufacture exemplified 
at Atlanta Exposition, 165 ; manu- 
facture of, developed subsequent to 
1 791, 89 ; manufacturing, coarse, 
165 ; plant, value of root of, 145 ; 
ties, duties on, 268 

Country, prosperity of, will be cited 
by AIcKinleyites, 265 

Cow-pea vine a renovator, 149 

Credit, instruments of, liquidate 95 
per cent, of purchases and sales, 
226 

Crude and partly manufactured mate- 
rials, admitted free by Great Britain, 
173 ; any tax upon, a serious ob- 
struction, 62 ; by taxing we deprive 
ourselves of advantage of our 
smaller army, 187 ; duties on, 27 ; 
duties raised upon, in tariff of 1S46, 
268 ; duty may be removed without 
injury, 126 ; if duties were removed 
from, this country would take the 
lead, 92 ; necessary in domestic 
manufactures should enter free, 62, 
67 ; necessity of exemption from 
taxation, 274 ; price above that of 
other countries, 29 ; removal of tax 
on, would do away with much foreign 
competition, 98 ; tax on, gives ad- 
vantage to foreign consumer, 140 ; 
tax on, limits production, ])revents 
exports, burdens commerce, 141 ; 
true cost of tax upon, 135 ; untaxed 
in Hamilton's tariff, 47 

Crude theory of trade, 106 

Customs laws in 1797, 32 

Customs, origin of, in reign of Edward 
I., 32 ; revenue for i890-'9i, 12 ; 
revenue from, in fiscal year ending 
June 30, 1 891, 20, 21 ; revenue, 
probable excess above pensions, 21 ; 
revenue, true, 19 



I) 



Daily Contmcrcial Bulletin^ Col. 
Wright's Report on Wages in, 20 



INDEX, 



281 



Dawes*, Senator, definition of Protec- 
tion, 199 

Debit side government account, 12 

Debt, burden of European nations, 
108 ; public, interest on, 11 

Deep-Water Ways Convention, ad- 
dress at, by George H. Ely, 137 

Democratic party of to-day a party of 
people, 259 

Democrats, party of Tariff Reform, 
275 

Despotism, views in regard to State 
possession of property, 2 

Detroit, Canadian laborers in, 199 ; 
tons of registered shipping passing 
city of, 137 

Disadvantage, our relative, in cost of 
iron and steel, 137 

Disparity in price of iron, considered 
in ratio to profits, 136 ; greater dis- 
advantage the lower the price is 
forced, 138 

Distribution, importance of mechanism 
of, 152 

Distribution of Products, 184 

Dollar, gold, weight of, 233 ; of United 
States compared to pound sterling, 
218 

Dollars and Thalers, 207 

Domestic, industry, promotion of, 
rests upon free import of food and 
crude materials, 67 ; manufactures 
should be promoted, 45 ; traffic, 
magnitude of, 137 ; traffic, vast 
volume of, compared to foreign, 
230 

Dutch, the, " ate the whitest bread in 
Europe," 231 

Duties, compensating, xii ; depress 
prices of materials abroad, 27 ; di- 
minish purchasing power of other 
nations, 27 ; impossible to adjust 
on imports by rates of wages, 54 ; 
inflict grave injury to workmen, 28 , 
maintain prices on crude materials 
higher here than abroad, 27 ; on 
crude materials render it necessary 
to grant compensatory duties, 28 ; 
progressive reduction of, 123 ; pro- 
gressive reduction on finer goods, 
128 ; upon articles of luxury, 26 

Dreibuiid treaty of reciprocity estab- 
lished, 174 



Earnings, actual average of employees 

in manufacturing arts in 1880, 94; 

average, of those occupied for gain, 

3 ; higher than ever before, 215 ; 

relative, 200 
Eastern States, greater wealth not due 

to a hii^h tariff, 156 
Economists' theories compared with 

facts, 160 
Edward I., customs originated in 

reign of, 32 
Eggs, and poultry, proceeds of sales 

distributed throughout country, 50 ; 

computed value of, in the United 

States, 50 ; product of Ohio, 50 
Ely, George H., address on Domestic 

Traffic given at Deep-Water Ways 

Convention, 137 
Embargo, result of, 47 
Energy, waste of, directed towards 

support of army, 186 
England, centre of world's commerce, 

231 ; purchasing power restricted by 

our tax on iron, 139 
European countries, machine-using 

States import food, 173 ; rank of, 

in use of machinery, 170 
Europe, product deficient, distribution 

bad, 184 
Excess, grave danger of slight, which 

cannot be exported, 141 
Exchange of products forbidden by 

Protection, 79 
Executive Department, cost of, 11 
Exemption of crude materials from 

taxation should be beginning of 

tariff reform, 146 
Expenditures, lessening year by year, 

II ; normal, of government, 18 
Exports, and imports, combined sum 

of our. III; to Great Britain, excess 

over imports, 218 
Export stopped by high tariff, 96 



Factory system, Webster argues that 
government is bound to sustain, 49 

Fallacious ideas of "paternalism" 
traced to attempt of Congress to 
regulate wages, 58 



282 



INDEX. 



Families, incomes of greater number 
of, 227 

Family, consists of, 200, 201 ; normal, 
expenditures of, 201 

Famine, in Europe, effect on the 
United States, 58 ; in Russia, loS ; 
Irish, in 1846, 37 

Famine-stricken Russia, 44 

Faneuil Hall, Webster's speech in, 
118 

Farmers', Alliance, demand for gov- 
ernment aid, 58; and cotton-growers, 
depression in price of products of, 
142 ; daughters, earnings in cotton 
factories fifty years ago, 167 ; fiat- 
money men, 213 ; of France and 
Germany, futile attempt to protect, 
by duties upon food, 174 

Farmer, tax on tin-plates works great 
injury to, 133 

Farm products, prices influenced by 
obstruction to imports, 67 ; value of 
imported, small, 129 

Federal government has no constitu- 
tional power, 257 

Fiat, dollars not wanted, 73 ; -money 
men's project, 213 

Fibres, tonnage moved by railways, 
221 

Finance, and taxation, interest of 
people upon questions of, 274 ; 
Committee's Report on prices and 
wages, viii, 262 

Finer fabrics may be taxed, 153 

Finished products, discrimination 
necessary in duties on, 270 

Fiske, John, on higher stage of bar- 
barism, 109 
' Florida and South Carolina, jihos- 
phates of, 149 

Flour, grain, and milling, no foreign 
competition in, 97 

Fluctuations in manufactures, reasons 
for, 143 

Food, and fuel, taxes must be taken 
off, 61 ; and live animals. Class A, 
duties on, 12 ; cost of, in ratio to 
proceeds of work, 149; cost one- 
half price of life, 150; deficient in 
nutritive power, 149 ; duty may be 
retained on articles of luxury. 126; 
Europe's ability to take our, depends 
on her means of payments, 142 ; ex- 



penditures for, at home and abroad, 

202 ; fibres, fabrics, movement of, 
224 ; importance of, for effective 
work, 175, 176 ; imported by Euro- 
pean machine-using States, 173 ; 
nitrogenous element supplies muscu- 
lar energy, 176 ; -problem here how 
to stop waste, 177 ; -problem in 
England, and other European coun- 
tries, 177 ; product, value of, 
moved by railways, 222 ; purchasing 
power diminished by tariff obstruc- 
tions, 139 ; quality must be right, as 
well as quantity, 176 ; relation of 
cost to earnings, 179; shelter, cloth- 
ing, final end of life-work, 225 ; 
supply assured only in Great Britain 
and Holland, 1 74 ; supply compared 
to fuel of steam engine, 176 ; supply 
compared to rate of wages, 177 ; 
waste in army supply of nations 
compared, 178 ; we supply ourselves 
with double product at half cost of 
European countries, 150 

Forest, value of products of, 221 
Forzou, 77n\ article by Edward P. 
North on magnitude of domestic 
traffic, 137 ; for September, 1891, 
condensed accounts of nation given 
in, I, 42 
France, and Belgium, their facilities 
for export of machine-made goods, 

172 ; Belgium, Germany, Holland, 
total population of, 185 ; exports 
from, 182 , food expenditure of, 

203 ; Germany, Belgium, Holland 
admit crude materials nearly free, 

173 ; sometimes dependent upon 
other countries for food, 174 

Free coinage, act t/iav pass, 229 ; more 
disastrous than McKinley tariff, 112; 
of silver, alliance of memliers of 
both parties to defeat, 71 ; of silver 
dollars act of fraud, 213 ; of silver 
dollars would sliake credit, 22 ; of 
silver will debase standard of value, 
112 ; when safe, 208 

Free conditions t)f exchange promote 
diversity of occupation, 54 

Free Trade, absolute, among the people 
of the United States, 52 ; absolute, 
ndl the declared motive of the Denio- 
(■rnti- parly, 73; absolute, would' 



INDEX. 



283 



Free Trade — Continued. 

result from strict interpretation of 
Republican tariff j)lanU, xvii ; all 
nations profit under, yet we profit 
most, 55 ; and Sailors' Rights, 47 ; 
ap[)lication of, should consider ex- 
isting interests, 38 ; a principle, 
105 ; attempt to attain, by devel- 
oping special branches has failed, 
154 ; British, begun under Peel, 48 ; 
clubs, bad methods, 264 ; conti- 
nental system of, among our various 
States, 25, 42, 100, 276 , countries 
of Europe only ones in which full 
supply of food is assured, 174 ; 
defended by Webster, 118 ; defined 
by Senator Hoar, 80 ; especially 
desirable for United States, 107 ; 
founded on a principle, 107 ; in 
United States may change centre of 
world's commerce, 219 ; our country 
demands to be governed by men who 
represent, no; Peel believes, must 
be introduced gradually, 38 ; pro- 
motes peace, 104 , requires no force, 
104 ; road to like road to virtue, 38 ; 
synonym for Liberty, 120 ; tariff of 
1846, 266 ; the objective point, 69 ; 
the right of every citizen, 122 ; ulti- 
mate object of the advocates of Pro- 
tection, 74 ; V'^^'ebster's great speech 
on, 47 ; why it must be dealt with 
as a policy, 264 265 

Free-trader, principle of, defined by 
Hoar, 81 

Freight charges, amount, 11 1 

French, Revolution, 108 ; soldiers 
fraternized with people, 191 ; thrift 
and cooking skill, 191 

Furniture, cost in i860 and 1880, 168 ; 
we excel in, 97 



G 



Gain, class divisions of persons occu- 
pied for, in 1890, 4 ; list of persons 
occupied for, as given in census of 
1880, 4 ; number occupied for, 3, 
43 ; number occupied for, in 18S0, 
53 ; proportion of population occu- 
pied for, 3 ; total number occupied 
for, in Pennsylvania in 1880, 56 

"General welfare" defined, 254 



George HI., number of act;; relating 
to imports in reign of, 33 

German government teaches working- 
people how to cook, 191 

Germans under-fed, 109 

Germany, and the Netlierlands, export 
of machine-made goods, 182 ; cost 
of work-ration in, 190 ; exports 
from, 182 ; high tariff under Bis- 
marck, 182 ; people almost unfit to 
work, 44 ; under-fed condition of 
workmen, 203 

Gladstone on Peel's Free-Trade 
measures, 38 ; repeal of Navigation 
Laws, 37 

Glass tumblers, price in i860 and 1880, 
168 

Gold, alleged scarcity of, 214 ; and 
silver, depreciation of, 214 ; and 
silver, ratio of, 214; and silver, 
substitution of instruments of credit 
therefor, 214 ; bars used in interna- 
tional commerce, 211 ; basis, prices 
and wages on a, 238 ; basis, result 
of resumption on, 239 ; dollar law- 
ful unit of value, 228 ; result of 
premium on, 239 ; scarcity of, 214 ; 
standard, restoration in 1S79, ^oi J 
standard. United States should ad- 
here to, 218 

Government, aid to private enterprises, 
robbery, 25 ; cost of, could be met 
by revenue from liquors and tobacco, 
244 ; cost of, in terms of work, 9 ; 
duty "to promote the general wel- 
fare," 86 ; expenditures of, for fiscal 
year ending June 30, iSgi, vi, 6, 7, 
II ; expenses variable but continu- 
ous, 11; extraordinary expenditures 
in fiscal year ending June 30, 1891, 
10; normal cost of, ii ; of United 
States in account with tax-payers, 
10 ; receipts, miscellaneous, 16 ; 
receipts, total, 16 ; service, number 
of persons employed in, 9 ; should 
receive all taxes paid by people, 46, 
153; support of, how derived, 6; 
total cost of, 12 ; true cost of, 11 

Great Britain, admits crude materials 
free, 173 ; and Ireland, facilities for 
export of machine-made goods, 172 ; 
Belgium, Germany, iron and coal 
deposits of, 139 ; burden in support 



284 



INDEX. 



Great Britain — Continued. 

of navy, 187 ; colonies, exports 
valued at, no ; cost of labor com- 
]:)ared to higher cost of iron in 
United States, 136 ; depressing 
effect of taxes on products in 1842, 
144 ; expenditure for food, 203 ; 
exports from, consist of useful 
fabrics, 182 ; Free-Trade country, 

181 ; in 1840, 35 ; led until recently 
in application of machinery to pro- 
duction, 170 ; lower cost of pig-iron 
to consumers in, 135 ; our principal 
customer, 271 ; rates of wages in, 

182 ; what has given control in trade 
to? 183 

Gross product, value of our, 224 



H 



Hamilton, advocates remission of duty 
on cotton, 51 ; and Webster on 
manufactures, 50 

Hamilton's, list of manufactures, con- 
clusions derived therefrom, 146 ; 
policy, 47, 85 ; Report on Manufac- 
tures, 86 ; tariffs, rates in, 47 ; testi- 
mony as to early manufactures, 89 

Hand- work, and machine-work con- 
trasted, 160 ; in exchange for ma- 
chine-work, 175 

Harbors, expenditures for, 11, 90, 91 

Harris, Edward, leads argument 
against wool and woollen tariff, 63 

Hen-yard, value of product of, 150 

Higher wages, lower cost, examples of, 

167 

High revenue duties justified for lim- 
ited period, 266 

High tariff, justified only by those 
who regard commerce as war, 107 ; 
long continued, depresses prices 
abroad, makes wages uncertain at 
home, 54 ; present system should 
not be continued, even in part, 156 ; 
system merely a policy, 104 

High wages, and low prices result 
of low cost of ))roduction, 169 ; low 
cost of production proved, 159 

Hoar, Senator George F., defines 
Free Trade, 80 

Holland, exports from, 182 ; formerly 
typical Free-Trade country, i8r 



Home market, danger of over-stock- 
ing, 141 ; should be developed, 45 

Household appliances, no foreign 
competition in making, 149 

House of Representatives, next candi- 
dates will be elected on platform 
of tariff reduction, 70 

House-room, approximate estimate of 
cost of providing for increased, 151 

Houses, manufacture of, number of 
men occupied in, 151 ; taxed at 
every point, 152 

Hume, James Deacon, further con- 
solidation of customs duties, 33 ; 
Joseph, brings about first step in 
tariff reform, 33 

Hume's table, logic of, converted 
Peel, 34 

Huskisson, leads measures for change 
in tariff laws of Great Britain, 48 ; 
puts wool in free list, 33 



Imports, and exports from Great 
Britain, 271 ; and revenues derived 
therefrom, bad form of annual 
statement, 34 ; classified by Hume's 
Committee, 34 ; dutiable, increase 
in, because of reduction in price, 
23 ; of finished fabrics invited by 
tax on crude materials, 140 ; paid 
for by our exports, 99 

Import tax riot a burden upon other 
nations, 2 

Income, and expenditure of the United 
States stated in form of an account 
current, i ; of State derived from 
taxation, 2 

Incomes, average, of workmen at 
home and abroad, 202 ; proportion- 
ate, in United States, 204 

Income tax, becomes surplus v/hen 
tax on crude materials is removed, 
144 ; unexpected yield in Great 
Britain from Peel's, 36 

Increased product at lessening cost by 
application of machinery, 161 

Independents compared to Free 
Soilers, 259 

Independent tariff reformers, work 
left for, xvii 

India, competition in wheat-growing 
with Great Britain. loi 



INDEX, 



285 



Indians, cost of support, 1 1 

Indus trial Progress of the Nation, 

Industry, domestic, relief to, by pro- 
posed abatement of duties, 23 ; some 
minor branches of, may have been 
established by almost prohibitive 
duties, 51 

Interior Department, cost of, ir 

Internal revenue, tax collected on 
spirits, tobacco, liquors, and oleo- 
margarine, 15 

International Commerce, aggregate 
sum given in Statesjnans Year Book, 
no; its amount, 210 ; liquidated in 
terms of pound sterling, 212 

International, imports and exports, 
211 ; legal tender, effect of a treaty 
of, 218 ; traffic, our proportion of, 

137 
Iron, actual price reduced from 1880- 
i8qo, 136 ; price lower abroad, be- 
cause of obstruction to our demand, 

Iron and coal. Great Britain's posses- 
sion of deposits of, 183 ; mines of 
Pennsylvania, workers in, 130 ; su- 
premacy in production of, now be- 
longs to United States, 183 

Iron and silver give occupation to 
very few, 50 

Iron and steel, effect of disparity of 
price on, 140 ; effect of same price 
inthiscountiy and abroad, 137 ; pro- 
ducers' profits due to control of 
patents, 156 

Iron industry, no great fluctuations if 
crude materials were free, 138 ; 
plea upon which tariff measures 
prior to 1861 were supported, 4g ; 
true Protection to domestic, how 
attained, 138 

'* Iron law of wages" wrong in free 
country, igi 

Iron masters, in Pennsylvania, mag- 
nificent incomes of, 36 ; large profits 
of, 29 

Iron miners and workmen, beggarly 
wages of, 36 

Iron ore and coal, in South need no 
protection, 156 ; of Maritime Prov- 
inces, I2g ; our supremacy in prod- 
uct of, 148 



Iron ore, cost of labor in each ton, 36 ; 
duty on, must be removed, xiv ; 
foreign, duty on import of, 36 ; im- 
port of ore from Spain and Cuba 
helps domestic ores, 94 ; number of 
persons employed in 1890, 93 ; pro- 
tection invoked in behalf of mining, 

93 

Iron ores of Germany, ' * basis process, " 
182 

Iron, pig-, wool, and silver now con- 
trol legislation of country, 49 

Iron rails and bars, disparity in price 
of computed, 136 

Iron, sheet, evil effect of tax on, 135 

Iron, sheet, rolled, tin-plates, etc., 
effect of reduction in prices of 
metals abroad upon production of, 

Italy, Austria, Hungary, Spain, Portu- 
gal, not effective competitors in ap- 
plication of machinery, 173 

Italy, devastated by pellagra, due 
to insufficient food, 44 ; food con- 
ditions in, 203 



J 



Jackson's, General, declaration in favor 

of Protection, 82 
Jevons' list of Prices, 214 
Judiciary, cost of, it 
Justice, Department of, cost, 12 



Labor cost and duty on iron ore equal, 
36 

Labor cost, investigated by Carroll D. 
Wright, viii ; not dependent on 
rates of wages, 51, 252 ; of ma- 
terials, absurd to set compensatory 
duty for, xiii 

Labor, Department of, cost of, ii 

Laborer, American, superior to under- 
fed "pauper laborer" of Europe, 
68 ; earnings of common and skilled, 
since 1880, 95 

Labor, per cent, of, in woollen and 
worsted manufactures, 91 ; wages 
of, have risen, 228 

Labor-saving processes in United 
States, 171 



286 



INDEX. 



Lasalle, " iron law of wages," igi 

Lawrence. Abbott, took part in Free 
Trade meeting, 47 

Leader wanted to do for America 
what Peel did for England, 36 

Leech, Edward O., tables of values 
of foreign coins, 236, 237 

Legal tender, act, how conceived, 213; 
no international act of, 210 ; no need 
of act of, 211 ; not missed in inter- 
national commerce, 212 ; power of 
act of, 208 

Legislative, body has no right to 
force circulation of coins of unequal 
value, 213 ; department, cost of, 11 

Legislature of New York attempts to 
interfere with freedom of trade, 120 

' ' Liberal appropriations " by Congress 
advocated by unthinking men, I 

Liberty, as used in Constitution, 120 ; 
defined by Judge Peckham, 120 ; 
defined by Webster's Dictionary, 
121 

Life-ration in Boston, 189 

Life-work consists of conversion of 
force, 225 

Liquors and tobacco, increase in 
government revenues from, 275 ; 
revenue from, suffices for all govern- 
ment expenses, except pensions, 71 ; 
revenue from, 18, 244 

Loan Association vs. Topeka, 24, 116, 
185, 255,258 

London, and Liverpool, tonnage be- 
tween, surpassed by shipping on 
Great Lakes, 137 ; and Paris, price 
of work ration in, igo 

London 7'imes refuses to print Mr. 
Atkinson's letter on price of 
wheat, loi 

Louisiana sold to United States, 108 

Lowell z/j. Boston, 115 255 

Lumber and wood-working, 97 

Luxuries, etc., duties on (Class E), 14 



M 



McCulloch's, Hon. Hugh, attention 
called to bad form of our tariff 
acts, also statement of imports and 
revenue, 34 

McCullough vs. State of Maryland, 
255 



Machinery, application of, to produc- 
tion greatest in Great Britain until 
recently, 170 ; applications of, to 
production justified, 159 ; competi- 
tion in supply of fabrics made by, 
171 ; increased cost of, 128 ; our 
export of, 138 ; penal offence for- 
merly to take drawings of, out of 
Great Britain, 50; tools, demand for, 
140 ; why we cannot export to Asia, 
Africa, and South America, 137 

Machine-using populations of Europe, 
171 

McKay Sewing Machine, revenue de- 
rived from work of, in Europe only 
two-thirds that of United States, 

McKinley act, and reciprocity, 72 ; 
answers from several of its leading 
supporters, 80 ; attempted exclusion 
of goods a failure, 124 ; contains 
germs of its own destruction, vii. ; 
defence of, by law officers of gov- 
ernment, 258 ; does it protect in- 
dustry of this country? xi ; double 
purpose of, 118 ; effect of, upon our 
commerce with Canada, 193 ; first 
step for repeal of, xi ; has no intel- 
lectual standing, 241 ; inconsistent 
with Republican resolution, xiii ; 
is the scorn and contempt of a large 
minority of those who voted for 
it, 24 ; its purpose cannot be real- 
ized, 123 ; low prices of cotton now 
under the, 48 ; protection under, is 
really privation, 122 ; public dis- 
trust of conceptions culminating in, 
109 ; Republican objections to, 70 ; 
will destroy Protection, 146 

McKinley bill, alleged careful con- 
sideration of comparative cost of 
making iron and steel at home and 
abroad, xv.; one merit, 25 ; sup- 
ported as a party measure, 57 

McKinley cases before Supreme 
Court, 258 

McKinleyism, a blunder, 275 ; advo- 
cates of, impute welfare of this 
country to obstruction of imports, 
230 ; and Protection, 45 ; doctrine 
of " protection with incidental 
revenue," 36 ; German, Capri vi's 
verdict upon, 174; its predecessor, 47 



INDEX. 



■87 



McKinley pebble, 230 

McKinley tariff bill, advances prices 
of tin-plates, 65 ; committed Re- 
publicans to Protection, 250 ; falla- 
cious expectation of bounties held 
out by, 129 ; intellectual capacity of 
its advocates, 59 ; is being rapidly 
condemned, 59 ; stupendous blun- 
der, 109 

McKinley, Wm., Jr., comprehension 
of tariff question, xi ; effect of his 
tariff upon Oswego trade, 197 ; fails 
to answer question, 81 ; framer of 
tariff bill, 250 

McMillin, Benton, work on Mills' 
Tariff Bill, 69 

McPherson, Senator, effect of Mc- 
Kinley Act, 193 

Manning, Secretary, classification of 
annual accounts, 35 

Manufactured, articles, Class D, 
duties on, 14 ; goods, labor cost of, 
xii 

Manufactures, depressed in Great 
Britain, 33 ; established, list of, 
given in Hamilton's Report on, 88, 
89 ; fluctuations in, reasons for, 
142 ; Hamilton's Report on, 86 ; 
mechanics and mining, number oc- 
cupied in 1880 in, 91 ; mechanic 
arts and mining, three-fourths of 
products from, could not be im- 
ported, 55 ; not a single important 
branch not established before 1791, 
89 ; of United States, Hamilton 
and Webster on, 50 ; our ex- 
ports increasing, 270 ; statistics 
of, given in census reports, 
93 ; very few branches in which 
any foreign competition could exist, 
98 

Manufacturing, and mining, rapid 
growth in South since slavery was 
removed, 54 ; arts established by 
1 791 noted in Hamilton's Report, 
87 ; mechanic arts and mining, 
number employed in, 53 ; number 
of persons occupied in, according 
to census of 1880, 94 

Maritime provinces, duty on iron ore 
and coal, 129 

Market, better in United States fr^r 
Canadian products, 194 



Marshall's, Chief-Justice, decision as 
to power of Congress to incorporate 
a bank, 255 

Massachusetts and Canada, fence be- 
tween, should be lowered, 199 

Merchandise, value of, moved by 
railways, 220 

Metal and mine products, little for- 
eign competition in, 92 

Metz. siege of, victory, how attained, 
179 

Militarism, disadvantages of, 185 

Milk, condensed, Switzerland's large 
foreign export trade, 133 

Miller, Hon. W. H. H., and Hon. W. 
H. Taft's briefs on sugar-bounty, 
254 ; Judge, Miller, on power of 
taxation, vi ; Justice, establishes 
limits of taxation, 24 ; Justice, rul- 
ing before Supreme Court, 257 ; 
ruling in Loan Association vs. 
Topeka, 116 

Mills bill, xii, 69 ; attempt to reform 
war tariff, 24 ; review of, sent by 
Hon. Thomas B. Reed, 83 

Mills, Roger Q., work on Mills tariff 
bill, 69 

Miners, and laborers in furnaces earn 
barely enough to support life, 29 ; 
iron, of Pennsylvania, wages in last 
census report, 30 

Mining, low rates of wages in, 50 ; 
number of persons occupied in, 
insignificant, 93 

Moltke, von, chief work, 179 

Money, coin or paper, scarce in sec- 
tions, 215 ; good and bad, 209 ; of 
redemption necessary, 209 ; paper, 
must be redeemable on demand in 
coin, 210 ; quality should be assured, 
217; standard of true, 241 

Moral obligations of Government, 116 

Morrill, Senator, upon McKinley act, 
193 ; upon the labor question, 197 

Morrison bill, xii 

Municipal taxation must be for public 
municipal purposes, 115 



N 



Napoleon, compelled to sell Louisiana 
to this country, 108 ; imposed debt 

u;i Holland, 181 



288 



INDEX, 



National, Bank Act, limitations of, 
215 ; debts, European, 188 ; debts, 
United States, 189 

Nationalism, views in regard to State 
possession of property, i 

Nations classified in application of 
machineiy to production, 172 

Nature, less the gratuities, more pros- 
perous the people, 157 

Naval vessels, expenditures for, 1890, 
1891, II 

Navigation Laws, repeal of, 37 

Navy, burden of Great Britain's 
enormous, 183 ; cost of, ii ; Great 
Britain's burden in support of, 187 

Necessaries of life, price of, 214 

New England, farmers' daughters in 
cotton factories, 167 ; would be 
richer if A\x\.\^% for revenue only had 
been imposed, 156 

New Hampshire, address before 
United Boards of Trade, 157 ; 
Canadian laborers in, 198 

New York and Pennsylvania, wheat 
production in, 164 

Nitrogen, deficiency of, in food of 
the masses, 186 ; means power of 
work, 176 

Noble's Fiscal Legislation of Great 
Britain, 33 

Non-machine-using, nations, compe- 
tition in supply of, 171 ; nations, 
why we cannot supply, 136 ; people, 
number who want cotton, 48 

Norman's, J. H., Jlie World's Ex- 
changes, 233 

North, Edward P., on magnitude of 
domestic traffic, 137 

Nutrients must be in right proportion, 
176 

Nutrition, comparative, of countries 
and States, 189 ; writer has lately 
made study of, 179 



Occupations, analysis of, in regard to 
foreign competition, 98 ; developed 
mostly without tariff interference, 
163 ; natural diversity establishes 
itself, 52 ; of people of the United 
States as listed in census of 1880, 
53 



Ofhcers, assistant, salaries of, 41 ; of 
governments, subordinate, excellent 
work, meagre pay, 39 ; total pay- 
ment of sixty-four chief, 41; United 
States, beggarly compensation of, 39 

Ohio, occupations of the people of, 
56 

" Osnaburgs," manufactured in South, 
165 

Oswego, milling trade destroyed by 
our tariff, 196, 197 



Pacific R. R., interest on bonds ad- 
vanced by government, 1 1 

Parliament, methods of, better than 
our administration, 262 

Partly manufactured articles could 
soon be put in free list, 23 

Party methods of tariff discussion bad, 
262 

Paternal policy no longer to be toler- 
ated, 58 

" Pauper laborers," deficient in nitro- 
gen, 176 ; ill-fed labor, 176; mystery 
disclosed, 186 ; of Canada in com- 
petition with New England labor, 
199 

Peas, beans, cheese, consumed to 
supply nitrogen, 190 ; supply nitro- 
gen, 17G 

Peel, Sir Robert, conversion to tariff 
reform, his reasons given, 38 ; con- 
verted by Plume's table, 34 ; ex- 
ample to be followed by United 
States, 127 ; first great measure for 
reform of British tariff, 32 ; first 
measure of tariff reform, 36 ; insti- 
tutes beginning of British Free 
Trade, 48 ; leader like, wanted in 
America, 36 ; leaves oflice, but 
tariff reform continues, 37 ; name 
will be honored on account of un- 
taxed food, 37 ; removal of taxes on 
crude materials, 144 ; rule laid 
down by, for selection of subjects 
of taxation, 125 ; second great act 
of tariff reform, 37 ; speech on leav- 
ing ofhce in 1847, 36; speech on 
presenting first measures for tariff 
reform, 35 

Pellagra devastates Ital)', 44, 109 



Index. 



2S9 



Pensions, Commissioner of, testimony 
touching their highest point, 71 ; 
Commissioner of, views as to future 
liabilities, 71 ; cost of first payments, 
10 ; estimated by Secretary of the 
Treasury, 21 ; in 1893, 124 ; neces- 
sity of careful estimct? of expendi- 
tures for, 60 ; roll, cost of recurrent 
payments, n ; to be paid from cus- 
toms revenue, 19 

People, mass of, will insist upon 
honest dollar, 229 ; move slowly 
but surely. 24 

People's will that taxation shall be 
reduced, 24 

People, will support right policy, 275 ; 
vs. Gilson, 120 

Pig-iron, additional annual cost paid 
by United States as compared to 
Great Britain, 64 ; American con- 
sumers of, price paid above foreign 
consumers, 135 ; and steel made 
at least cost here, xv ; and wool, 
European consumers given advan- 
tage by our tax, 196 ; average price 
of, kept above price in other coun- 
tries, 29 ; disparity in cost of, to 
American consumers computed by 
David A. Wells, 29 ; duty upon, 
must be removed, xv ; lower cost 
to consumers in Great Britain, Ger- 
many, Belgium, 135 ; protection of, 
64 ; value at furnace, 49 ; wool, 
silver, production insignificant, 50 ; 
Wool, Silver, Unholy Alliance of, 173 

Pine boards, effect of duties on, 195 

Pitt, William, act for consolidation of 
duties, 32 

Policy, Webster's definition of, 76 

Poor, H. v., on value of goods moved 
over railways, 223 

Postal, deficiency, li ; service, reve- 
nue from, 15 

Potatoes, duty upon, must be re- 
moved, xiv ; unjust tax on, 62 

Poultry and eggs, value of, 49 

Pound sterling, international com- 
merce liquidated in, 212 ; and sov- 
ereign defined, 210 

Pounds, troy and avoirdupois, analogy 
to gold and silver, 207 

Poverty of workingmen of Great 
Britain, remedy proposed for, 35 
19 



Prices, and wages, vSenate investiga- 
tion of, 262 ; evil effect of relatively 
higher, x ; lower in United States, 

215 

Principle, and policy contrasted, 76 ; 
defined, 212 ; of Protection, 80, 
257 ; policy of country must become 
adjusted to, 75 ; Webster's definition 
of, 76 

Product, annual, result of annual 
work, 2 ; depleted, work increased, 
by consumption of armies, 43 ; 
gross, of United States, 219 ; in- 
creased by invention, 163 ; increase 
of, brings excess to be saved, 162 ; 
joint, value of, estimated, 5 ; of 
United States, 110 ; result of work, 
184 ; rule for distribution of, 6 ; 
worth of average annual, 4 

Production, low cost of, results in low 
prices and high wages, 169 

Products, distribution of, false in 
United States, 25 ; distribution of, 
various methods, 2 

Professional and personal service, 
number employed in, 53 

Profits, margin of, in Canada, 195 

Profit, trade depends on small margin 

of, 133 ; 

Progress, of country depends upon 
application of science and inven- 
tion, 100 ; of this country in ma- 
terial welfare, 57 

Prosperity, of United States not due 
to high tariffs, 99 ; which will ensue 
from reduction of duties will in- 
crease consumption, 127 

Protected industries, few in number, 
147 ; give neither higher wages nor 
greater profits, 147 ; greater fluctua- 
tion, more foreign labor in, 99, 147, 
148 

Protection, advocates of, formerly sup- 
ported it as a temporary policy pre- 
paratory to Free Trade, 61 ; a fence, 
199 ; and Free Trade represent the 
same purpose, 74 ; a policy^ not a 
principle, 83, 84 ; artificial govern- 
ment, injurious, 119 ; defence of 
policy rests wholly upon erroneous 
assumption in regard to rates of 
wages, 84 ; defined, 79 ; does not 
diversify industry, 89 ; does not 



290 



INDEX. 



Protection — Continued. 

raise wages, 93 ; given up by Great 
Britain under pressure of pauperism, 
32 ; has reached its destruction in 
McKinley act, 145 ; how will it be 
most fully assured ? 265 ; is claimed 
to be a principle, 79 ; makes more 
work; object of science to save work, 
154 ; '* Principle of," 72 ; principle 
of, defined by Senator Aldrich, 82 ; 
principle of, defined by Senator 
Hoar, 81 ; Professor Thompson's 
letter on, 85, 86 ; promotes war, 104 ; 
purpose of, to raise rate of wages 
and divert capital, 104 ; really priva- 
tion, 107 ; "reasonable measure of," 
required by infant manufactures, 51; 
reasons why it is logically wrong, 
146 ; to domestic industry, how 
assured, xi ; to domestic industry 
will consist in free men, free soil, 
free speech, and Free Trade, 68 ; to 
manufactures, chief argument for, 
has been high rates of wages in agri- 
culture, 100 ; under pretext of, any 
Congress can tax all persons for 
benefit of single class, 117 ; what is 
it ? 45 ; what is the principle of ? 80 ; 
"with incidental revenue," 72, ri8; 
" with incidental revenue " impossi- 
ble, 123; " with incidental revenue," 
object of McKinley bill, 251; "with 
incidental revenue " the 7tew pur- 
pose of McKinleyism, 78 ; vs. Free 
Trade, 264 

Protective, duties protect only in 
periods of short crops in other 
countries, 174 ; duty leads to over- 
production, 113; policy, one pro- 
fessor sustains, 85 ; side, bad meth- 
ods of, 264 ; system, beginning of, 
86 ; system culminates in disaster, 
1840, in Great Britain, 25 ; system 
destroys trade, 34 ; system in Great 
Britain culminates in desperate con- 
ditions in 1840, 35 ; system, objec- 
tive point ultimate Free Trade, 72 ; 
tariff, effect of, exaggerated, 95 ; 
tariff, evil effect of, oljstruction to 
trade, 95 ; tariff restricts rather than 
promotes diversity of occupation, 
51 ; tariff stimulates few industries, 
95 



Proteids, how derived, 176 

Public, buildings, expenses of, in 
i8go, 1891, II ; good should be 
considered in framing a tariif 
bill, 46 ; opinion on tariff, change 
in, 58 

" Public purpose " defined, 255 



R 



Railway-freight traffic, increase in, 
216 

Railway Manual, The, value of 
goods moved over railways given 
in, 223 

Railways, number of miles constructed 
annually, 152 

Rate of wages, high in United States, 
cost of production low, 54 ; not a 
sure standard of cost of labor, 54 

Rates of wages, advance in unpro- 
tected arts, proves that our pros- 
perity does not depend on tariff, 
100 

Ration of German soldier in active 
service, 189 

Rations, cost abroad, 202 ; cost of, in 
Berlin, 202 

Ration- work, price of, in Michigan, 
Iowa, and Nebraska, 190 

Receipts, what the miscellaneous per- 
manent consist of, 18 

Reciprocal Free Trade between Great 
Britain, Canada, and United States, 
future of, 188 

Reciprocity, additional treaties of, 
275 ; Dreihund, treaty established, 
174 ; in trade between Austria, 
Italy, Germany, Switzerland, Bel- 
gium, 44 ; Republican measures for, 
72 ; treaties between Germany, Aus- 
tria, and Italy, 105; works for peace, 
44 ; with Canada, 105 

Reductions in duty under last tariff 
bill, 19 

Reed, Thomas B. , cannot state " Prin- 
ciple of Protection," 83 

Religious, commercial, wars com- 
pared, 108 

" Report on Manufactures," 116 

Republican, party, view of bounties, 
258 ; platform, tariff plank in, 251 ; 
tariff plank revolutionary, xvii 



INDEX. 



291 



Republicans, and Democrats differ [ 
merely as to time and method of j 
tarill reform, 61 ; should be com- j 
pelled to adhere to terms of resolu- 
tion, xii I 

Revenue, cost of, derived from taxa- 
tion on articles of common con- 
sumption, 6 ; derived from taxes on 
crude materials could be spared, 143; 
derived from taxes on crude prod- 
ucts, 143 ; derived from taxing crude 
materials, 143 ; duties will increase 
with increase of consumption, 31 ; 
ends where Protection begins, 117 ; 
excess constant source of danger, 46; 
excess from liquors and tobacco in 
1893 and 1894 will sufhce to cover 
increase in pensions, 22 ; excess 
from liquors and tobacco in 1893 
may be applied to pensions, 125 ; 
from liquors and tobacco, 18 ; 
from liquors and tobacco exceeds 
disbursements for civil service, 17 ; 
from liquors and tobacco in 1893, 
125 ; from liquors and tobacco, 
1871-1891, ig ; from miscellaneous 
permanent receipts exceeds interest 
on public debt, 17 ; from perma- 
nent receipts, liquors and tobacco 
sufficient to cover all government 
expenses, except pensions, 17 ; 
ignored in Republican tariff plank, 
251 ; increased from advance in 
rates on tin-plates, wool, and 
machinery, 20 ; necessity for, hence 
necessity for tax, 74 ; principal 
source of government, 17 ; proba- 
ble excess in 1892, 19 ; probable 
excess of, 22 ; probable, from 
liquors and tobacco in fiscal year 
ending June 30, 1892, 19 ; pub- 
lic, should be limited to neces- 
sary expenses of Government, 46 ; 
sutficient for pension roll can 
be derived by taxing luxuries, 
127 

Rhenish Prussia, cost of production 
of wheat in, 102 

Rich, enabled to pick pockets of poor, 
213 ; rich richer, poor poorer under 
British protective system, 36 

Rivers, expenditures for, in iSgo, 
1891, II 



Robbery, legal, done under fox^ms of 
law, and called taxation, 117 

Russia, famine-stricken, 44, 109 ; 
starving ; evil effect of tax on 
sheet-iron, 135 ; Sweden, Norway, 
non-competitors in supplies to non- 
machine-using nations, 173 

Russia's position in use of machinery, 
171 



Salaries of chief United States officials 
and assistants, 40 

Sault St. Marie Canal, traffic now 
exceeds traffic of Suez Canal, 108, 
152 

Sausage, German, importance of, 179 

Savings-banks, profit secured to fac- 
tory operatives by, 157 

Science and invention, effective ap- 
plication of, 172 

Scrip, use of, 207 

Sedan, victory at, 179 

Self-binder and reaper reduces price 
of harvesting wheat, loi 

Senate, Finance Committee, report 
on income and expenditures, 201 ; 
next, will probably sustain judicious 
method of tariff reduction, 70 

Senators and Members of Congress, 
beggarly compensation of, 39 

Sheeting standard, wages fifty years 
ago and to-day compared, 167 

Shelter of our people, manufacture of 
buildings, 151 

Sherman, bill will probably be re- 
pealed, 250 ; Senator Johii, defines 
the " Principle of Protection," 82, 

83 
Ship-builders, machinists, etc., our, 

forbidden to co npete on even | 

terms, 140; our, hindered, 139 
Shipping on Great Lakes surpasses in 

tonnage that between London and 

Liverpool, 137 
Shoddy-cloth mills replace milling 

wheat under McKinlcy act, 197 
Silks, wcwllens, and cottons, increase 

of dulies on, 254 
Silver, agitation caused by difficulty in 

sales of excess of farm products, 

142 ; bi-metallism and free coinage, 



292 



INDEX, 



Silver — Continued. 

205 ; bullion, price affected by tax, 
247 ; bullion, price of, 238 ; bullion, 
price paid for purchase of, 239 ; 
bullion purchase, taxation for, 8 ; 
dollar compared to gold, 209 ; dol- 
lar, its worth, 209 ; dollar, present, 
bad money, 241 ; dollar, present 
value, 238 ; dollars, free coinage of, 
would imperil unit of value, 244 ; 
dollars, how maintained at parity 
with gold, 244 ; dollars, result of 
free coinage of, 228 ; foreign de- 
mand, how met, 245 ; free coinage 
of, absurd argument of advocates of, 
238 ; free coinage would endanger 
commerce, 219 ; mines, men of both 
parties unite to defeat efforts of 
owners of, i r3 ; mines, petty prod- 
uct of, 219 ; -mining States, demand 
of, 240 ; pig-iron, and wool dominate 
Congress, 120 ; question discussed 
before the British Association in 
1887, 100 ; question, division upon, 
not a party one, 250 ; result of free 
coinage of, 239 ; result of tax upon, 
proposed by Chauncey Smith, 245 ; 
standard, result of single, 244 ; 
value of, 49 ; why should it not be 
taxed ? 244 

Sinking-fund act a juggle in book- 
keeping, 20 

Slaughtering and meat-packing, 97 

Slavery, value of the abolition of, 
148 

Smith's, Chauncey, project for main- 
taining silver at parity with gold, 
242 ; testimony upon superior pro- 
ductive power of American work- 
man, 186 

"Smothered in our own grease," 58, 

149. 
Socialism, mild, views in regard to 

State possession of property, I 
Socialistic or communistic acts limit- 
ing hours of labor or methods of 
payment, 104 
Soldiers' Homes, support of, 11 
Solicitor-General, salary of, 40 
Southern States, no protection required 
for mining ore or establishment of 
textile factories, 148 
South, needs of, to-day, 209 



Sovereign, weight of, 233 

Specie payment, resumption of, 228 

Standard of value, danger of impair- 
ing, 205 

Standing army of Upited States, 
187 

State, Banks' tax, 217 ; Department, 
cost of, II ; possesses no property 
but public buildings and public 
lands, 2 

Statesman's Year Book for 1891, no; 
1892, 185 

Statistical data, value of, in Vol. XX, 
census of 1880, 167 

Statistics of manufactures found in 
census, 96 

Steel, abnormal profits in manufacture 
of Bessemer not due to protection, 

99 

Suez Canal, traffic compared to Sault 
St. Marie Canal, 108, 152 

Sugar, added to free list, 62 ; -bounty 
clause, argument for, 1 14; duties 
have always had effect of bounties, 
116 ; heavy investments in plant, 
116 ; -planters, bounty to, 253, 

254 

Summary of Chapters I-XXIV, 181 

Supreme Court, defines principle of 
taxation, 24 ; judges, salary of, 40 ; 
justifies protective tariff, 114 ; no 
longer a co-ordinate branch of gov- 
ernment, 117 

Surplus, writer's estimate of, differs 
from computations of Secretary of 
Treasury, 21 

Switzerland, benefit of untaxed tin- 
plate to, 133 



Tariff, a minor force, 266 ; act of 
1824, 63 ; act may be reached by 
reasonable compromise, 129 ; acts, 
bad form of, 34 ; acts since 1861 
all objectionable, 70 ; and currency 
debates in Coni^ressional Record, 
263 ; for " protection," effect of, 
122 ; framed to raise or maintain 
prices unjust, 46 ; high, cost of, 
131 ; how it should be reformed, 
22 ; McKinley, see McKinley tariff, 
act, bill ; measure, simple to pre- 



INDEX. 



293 



Tariff — Continued. 

pare, 24 ; Morrill, of 1861, 157 ; 
not distinct from tax or duty, 2 ; 
one of minor forces affecting con- 
dition of country, 103 ; our, framed 
to obstruct imports from Great 
Britain, 178 ; of 1824, 63 ; of 1842, 
267 ; protective, of 1842 in United 
States enacted year of Peel's reform, 
48 ; " Free-Trade," of 1846, 266 ; 
of 1846, 266; of 1857, 268; of 
1861. 157; of 1867, 72; of 1883, 
78; of 1890, see McKinley tariff act, 
1890 ; McKinley tariff, see McKin- 
ley ; on Canadian products de- 
presses price, 194 ; plank in Re- 
publican platform, 251 ; present, 
many specifications inoperative, 
130 ; question, difficulty in dealing 
with, V ; question should be re- 
moved from party politics, 73 ; 
question less important than cur- 
rency, 273 ; reduction, neither party 
has presented a perfect measure for, 
69 ; reduction would follow Repub- 
lican tariff plank if consistently car- 
ried out, 253 

Tariff reform, advocates err in de- 
manding radical revolution, I2g ; 
continuation of both parties in, 113 ; 
danger in injudicious methods of, 
59 ; in Great Britain, effect of first 
measure not immediately percepti- 
ble, 37 ; method of, 57 ; in Great 
Britain, first decisive step in, 33 ; 
judicious, two measures necessary, 
59, 60 ; necessary to remove ob- 
structions to trade, 266 ; needed, 
concentration upon a definite plan 
of reduction, 23 ; Peel's method the 
proper one, 38 ; Peel's second great 
act, 37 ; promoted by removing un- 
important duties, simplifying com- 
merce, 23 ; should begin by mak- 
ing crude materials free, 146 

Tariff reformers should question Re- 
publican candidates, xvii ; resolu- 
tion in Republican platform, xi 

Tariff system, grave dangers would 
ensue from bad methods of change, 
267 ; war, three attempts to reform 
it, 24 ; why a cause of disruption, 
113 



Taxation, ability of this country to 
bear perversion of, 57 ; accustoms 
people to artificial support, 155 ; 
aggregate of compared to product, 
3 ; and revenue derived therefrom, 
12 ; and lVo7-k, motive of, 261 ; and 
work, names for same thing, 5, 259 ; 
and work same thing, 12 ; burden of, 
how measured, 135 ; burden of, as 
borne by different classes, 5 ; com- 
parative, elements considered, 42 ; 
depresses price of pig-iron, 195 ; 
diminishes general product, 155 ; 
direct and indirect, vii ; discrimina- 
tion must be used in choice of sub- 
jects of, 74 ; discrimination should 
be used in framing measures, 61 ; 
establishes disparity in cost of crude 
materials, 155 ; fundamental prin- 
ciples of, 72 ; judicious selection of 
subjects necessary for tariff reform, 
60 ; limitations, set forth by Justice 
Miller, 25 ; measured by work, 6g ; 
must rest on principle, 80 ; of crude 
products unjust, 46 ; one method of 
distributing annual product, 2 ; our 
burden compared to Great Britain's, 
188 ; our burden of, though light, 
is badly adjusted, 44 ; our burden 
of, very light, 8 ; principle of, de- 
fined by Supreme Court, 24 ; ratio 
of all, to product, 8 ; re-distrilDution 
of burden of, 35 ; reduces price of 
our crops, 155 ; robbery, in case of 
bounties to aid private enterprises, 
117; should be framed to protect 
A.merican workman, 6 r ; simple and 
effective system will halve burden 
of, 154 ; sure method of raising 
valuation, 243 ; system must be sim-. 
pie, 73 ; unlawful, may be imposed 
by legal measures, 185 

Tax, burden of, how measured, 131 ; 
defined, 122 ; demand for work, 4 ; 
most destructive form of, 205 ; not 
put on other countries, 139 ; on fin- 
ished products, cost of, 140 ; on 
silver, how it might be imposed, 246 ; 
on silver, how it should be levied, 
248 ; on tin-plate reduces wages, 
134 ; power to, defined by Justice 
Miller, 24 ; upon State banks, 217 ; 
various definitions of, 2 



294 



INDEX. 



Taxes, and armies, great burden 
of, 109 ; evils of, 27 ; municipal 
and national, compared, v ; not 
put upon others, 256 ; paid by 
people which government does 
not receive, 28 ; received by govern- 
ment all paid by people, 2 ; that 
people pay government must re- 
ceive, 73 

Tea, coffee, sugar, remission of duties 
on, 78 

Tenure of office, no assurance of, 
during efficient and honest service, 

41 

Textile, fabrics, and metal industries, 
stimulated by tariff, have had no ex- 
cessive profits, 99 ; consumption of, 
153 ; fabrics, duties on, 26 

Thompson, Professor Robert Ellis, 
sustains policy of Protection, 85 ; 
his ground contested, 87 

Timber, our supremacy in product of, 
148 

Tin-plate, additional cost of, under 
McKinley tariff, 65 ; arguments 
of Senators in favor of tax on, 
131 ; effect of abatement of tax 
on, 133 ; industry loathsome and 
undesirable, 65 ; tax " no burden ! " 
131 ; tax, true burden estimated, 
132 

Tin-plates, futile attempt to establish 
manufacture of, 124 ; great advan- 
tage to farmer and canner when 
tax is removed, 62 ; tax on, cuts off 
Great Britain's means of payment 
for our products, 66 

Tobacco, and wool, only agricultural 
products of Pennsylvania which 
could be imported, 55 ; tax upon, 
raises price to consumer, 243 

Tonnage moved by rail, 1890, 221 

Tons moved over railways in 1882 and 
1890 compared, 215, 216 

Trade, and Free Trade defined, 121 ; 
and transportation, number em- 
ployed in, 53, 227 ; bad effect 
of interference with, 66 ; immense 
volume of, endangered by project 
for free coinage, 226 ; volume of, 
220 

Transactions, measure of business, 
225 



Treasurer of the United States, salary 

of, 40 
Treasury Department, cost of, ii 



U 



Uncle Sam asked what he has done 
with product of people's work, 10 

Under-fed Europeans, how they can 
buy our products, 191 

Unholy Alliance of Pig-iron, Wool, 
and Silver, 173 

Union Pacific R. R. sinking-fund, ii 

United States, and Canada, competi- 
tion with Great Britain in supply of 
non-machine-using nations, 171 ; 
facilities for expoi't of machine- 
made goods, 172 ; material welfare 
of, 276 ; now leads in application of 
machinery to production, 171 ; value 
of product, no 

Unit of value, will of the people on, 
73 

V 

Vespucci, Amerigo, 108 
Vice-President, salary of, 40 

W 

Wages, abroad and at home, what is 
exact difference? xiv ; advance in, 
not due to high tariff, 95 ; advance 
in rates since 1880, 169 ; and prices, 
statistics in census of 1880, 166 ; 
Cairnes' theory of, 161 ; effect of 
our tariff upon foreign, 269 ; Francis 
A, Walker's theory of, 161 ; fund, 
misconception of, 160 ; high rates 
of, correlative of production of 
goods at low cost, 84 ; increase in 
rates of, since 1880, 94 ; in Europe 
lower, cost of labor higher, 1.87 ; in 
manufacture of agricultural imple- 
ments, 96 ; in Nova Scotia and New 
Brunswick compared to Maine, 
ig8 ; lower in protected than un- 
protected arts, 99 ; maintenance of 
rate depends upon financial sta- 
bility, 22S ; Protection docs not 
raise, 93 ; purchasing power in 
food, 203 ; rates of, in Great Britain, 



INDEX. 



295 



Wages — Continued. 

182 ; rates of, rest upon adequacy of 
food supply, 177 ; rates of , we should 
not seek to equalize, 54 ; rise stimu- 
lated by manufacturing activity, 23 ; 
steady rise in, ix ; we can pay high- 
est, 184 

Wagons, price in i860 and 1880, 168 

Wales, tin-plate workers in, 65 

Walker, Francis A., theory of wages, 
161 ; Robert J., framer of tariff of 
1846, 267 

War-burden, effects of tremendous, 
109 ; mostly incurred by attempts 
to restrict commerce, 108 ; upon 
Germany, Austria, and Italy, 43 

" War of all against all " the tendency 
of isolation by high tariffs, 174 

War tax, European, computed in 
terms of work, 43 ; measured in 
money, 42 

War of 1 812, effect on trade, 47 

Waste of misdirected taxation, 154 

Wealth, and poverty sharply con- 
trasted in Great Britain in 1840, 35 ; 
assured in inverse proportion to 
natural resources, 157 

Webster, Daniel, defence of Free 
Trade in 1820, 118 ; defender of 
Constitution, 119 ; great speech on 
Free Trade at Faneuil Hall, 47 ; 
later sustains protective policy, 49 ; 
on "foreign paupers," 192 ; opposes 
protective system in debate with 
Clay, 48 

Weeks, Joseph D., thorough work on 
statistics of wages and prices, 166 

Wells, David, A., upon disparity in 
cost of pig-iron to American con- 
sumers, 29 

Wheat, average price of, in Mark 
Lane between 1870-1887, 102 ; 
California, produced at highest rates 
of wages, lowest cost of production, 
164 ; Canadian, 1 96 ; cost of pro- 
duction compared to rate of wages, 
102 ; cost on Western farms, 102 ; 
export of, replaced l)y flour, loi ; 
gain between 1873-1887, 102 ; labor 
cost in barrel of flour i860 and 
1880, 168 ; margin of profit con- 
trols export trade, 134 ; place of 
production changed, 164; present 



price per quarter, 102 ; reduction 
in charges of handling and moving, 
102 ; reduction in price on account 
of competition of United States 
with Great Britain, loi 

Whig party, Republicans compared 
to, 258 

Wilson, Wm. L. , work on the Mills 
tariff bill, 69 

Women, arduous field work in Europe, 
186 

Working community, average product 
of, 3 

Workman, ill-nourished in Europe, 
190 ; receives here increasing share 
of increased product, 162 

Workman's money must be equal to 
banker's money, 73 

Workmen should be considered before 
capitalists, 46 

Work required to support all who 
perform government work, 7 

World's commerce, centre might be 
transferred to this continent, 231 ; 
centre of, 231 

World' s Exchanges y The, 233 

Wool, and cotton, useful fabrics should 
be exempt from taxation, 153 ; and 
woollens, present provisions of 
McKinley bill on, 77 ; and wool- 
lens, tariff on, xiii ; and woollen 
tariff, 76 ; and woollen tariff, for- 
mer arguments against, 63 ; be- 
lieved that duty on foreign, would 
protect domestic wool-grower, 77 ; 
duty on foreign, depresses domestic, 
94 ; effect of duty on, 30 ; effect of 
obstruction of import, 30 ; effect of 
tax upon, 141 ; effect of various high 
tariffs on price of, 63 ; hemp, flax, 
and other fibres put on free list in 
the Mills bill, 69 ; injured by " pro- 
tective" tax, 63; labor cost un- 
known, xvi ; must be separately 
treated in tariff legislation, 92 ; 
must go in free list, xvi ; pig-iron, 
and silver, representatives of, make 
use of Republican party, 253 ; price 
of domestic, advances under freer 
trade, 63 ; put in free list in Great 
Britain by Huskisson, 33 ; reason 
of attempt to exclude foreign, 181 ; 
Texan, compared with Australian, 



296 



INDEX, 



Wool — Continued. 
xvi ; value of, 49 ; why duty lowers 
price, 30 

Woollen and worsted, fabrics, ad- 
valorem duty on, 77 ; fabrics, in- 
creased import of, 124 ; manufac- 
tures in 1890, report on, 91 

Woollen, manufacturers argue against 
duty on wool before Ways and 
Means Committee, 77 ; manufac- 



tures, specific compensatory duty 
upon, 77 ; trade, balance of industry 
explained in, 64 
Wright, Col. Carroll D., facts about 
iron and steel industry not disclosed 
to, xvi ; investigations on rate of 
wages and cost of labor, viii ; on 
wages and cost of subsistence abroad, 
200 ; work on Seventh Report of 
Department of Labor, 204 



